These days there seems to be endless information available on “what to expect where you’re expecting.” From books, magazines, and blogs, to social media and acquaintances who already have kids, there is a wealth of knowledge around every corner. However, as most parents know from experience, there really is no way to be fully prepared for what being a first time parent entails.
One thing is certain, having a child is expensive. According to a report from the Department of Agriculture, the national average for raising a child from birth to the age of 17 was $233,610. Being prepared financially before your bundle of joy comes into this world is one situation that you can prepare for and control.
The following are a few areas with financial implications which you can begin planning for before your child comes along:
- Health insurance. There are going to be a lot of visits to the doctor’s office while pregnant and then again as follow-ups after the baby is born. Look into your health insurance plan so that you have a heads up as to which expenses are going to be out-of-pocket and which expenses are covered.
- Time off from work. Talk to your employer to see how much time is allotted for maternity and/or paternity leave and if you will need to put money aside if time off is unpaid. Going a few months without pay is difficult to unmanageable for most families.
- Child care. Hiring a nanny or enrolling your child in day care are costs that add up quickly each month. Start researching places and people so that you can start budgeting before your child is born.
- It might be overwhelming to plan that far into the future when your child hasn’t made his or her way into this world yet, but setting up a 529 account is a great way to plan for the future. The earnings on the account grow federal tax-free and will not be taxed when the money is taken out to pay for qualified educational expenses.
- Creating a will. While not the most pleasant conversation to have, it is extremely important to decide who will take care of your child should anything happen to you and your partner. Once a guardian is chosen a lawyer or an estate planner can help get all the details into writing.
- Life insurance. A financial planner or insurance agent can help you figure out the type of coverage you should choose so that your child is cared for financially in the event that you are no longer able to provide for him or her.
- Baby essentials. Diapers, formula, clothes, nursery room furniture, etc. It all adds up fast! Look into the average cost of certain items and set aside a weekly budget.
Being financially prepared before becoming a parent will give you one less thing to worry about once the baby has arrived. There are going to be plenty of learning experiences along the way that will naturally create stress as a new parent so scratching a few things off of the list will help you to enjoy all of the precious moments that much more!