Welcome back to Money Moment, with Dr. Jennifer Hunter.
If you are expecting a baby, congratulations are in order! Preparing for your little one’s arrival is an exciting time that requires a lot of decision making. These decisions range from which baby gear to buy, to child-care arrangements. By now you have probably realized that each of these decisions comes with a price tag. To make the most of your pregnancy and the upcoming arrival of your baby, it is a good idea to make financial preparations your top priority. In this episode, we discuss financial considerations that you should keep in mind while preparing for the baby’s arrival.
Flickr [Mom and baby by marki1983, August 7, 2015, CC BY-ND 2.0] Retrieved on September 23, 2015
Create a family budget
If you are not already living on a budget, now is the time to sit down and create one. Having a baby will definitely impact your monthly spending. It is important that you have an idea of where your money is going and how the arrival of your baby will impact your current and future financial situation. Be sure to keep expected expenses, like diapers, as well as unexpected expenses, such as unscheduled doctor’s visits, in mind.
I often encourage folks that they have nine months to prepare financially for a baby, it is important to use the time wisely. Start by identifying your anticipated baby budget early and then begin spending and/or saving based on that budget, prior to the baby’s arrival. This lets you work the kinks out of the budget before the baby gets here. The money that you have identified going toward the baby’s expenses, such as childcare, formula or diapers, should be put into a savings account which will allow you a little bit of a cushion when the baby does arrive if you have an unexpected expense.
Shop for Mom
In addition to buying for baby, you will also need to buy for Mom. It is easy to forget that you will have special purchases for Mom. For some purchases, such as maternity clothing, consider shopping at consignment and discount stores to get the most for your money.
Do your research
Before buying for your baby, it may be a good idea to seek out the advice of friends and family who have had children in the past few years. You will get a good idea of which baby gear you will most likely need, as opposed to which baby gear you can wait on. Friends and family can also help prepare you for what to expect financially for things like diapers and childcare.
Buying for Baby
Before buying, check with family and friends to see if they have any gently used baby clothing or gear they would be willing to give to you or sell at a reduced cost. Babies grow so quickly that most clothing and accessories have very little wear. Also consider shopping at your local consignment stores to save money.
Spread out your spending
A typical pregnancy lasts 40 weeks. Take advantage of those 40 weeks to spread out your spending. At the beginning of your pregnancy, make a list of all anticipated expenses related to the pregnancy and the birth of your baby, including medical bills, unpaid time off for maternity leave and baby gear. If possible, total those expenses and set aside a certain amount each month to cover those costs.
Know what is covered
Contact your insurance company and doctor’s office to figure out what you will be responsible for paying and when your payments will be due. Each doctor’s office has their own policies. For example, your doctor’s office may charge a flat fee for all appointments and delivery, or they may charge separately. Calling your insurance company to ask what pregnancy costs will be covered as well as what your co-pays, deductibles, and out of pocket costs will be, helps you make sure that you are able to cover all expenses as they occur.
Remember, while it may be tempting to buy every cute onesie that you see, preparing financially for your baby must be your top priority. Being financially prepared for your little one’s arrival will help you avoid debt and stress so that you may enjoy every precious moment that you have with your baby.
Thank you for listening today and congratulations again on your new arrival!
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This material is based upon work supported by the National Institute of Food and Agriculture, U.S. Department of Agriculture, and the Office of Military Family Readiness Policy, U.S. Department of Defense under Award Number 2019-48770-30366.