Prepare for an expanding family to ease the financial transition
Having a baby means big changes in your life—not the least of which are the financial changes you’ll need to make to get ready for your new addition. A 2014 USDA report states that it costs over $245,000 to raise a child. Here’s a rundown of the financial implications you’ll need to consider:
Budget for baby ahead of time. Put together a list of expenses you’ll incur when having a child. Consider insurance co-pays and expenses, baby supplies, and Mom’s missing or reduced paycheck if she works. Then, begin setting aside money in a savings account to cover those costs.
Find out how to add baby to your health insurance. If you both have insurance through work, check out who has the better coverage and what, if anything, it will cost to add a baby to the policy. Then, add the extra amount to your budget, if necessary.
Look into life insurance policies. If you don’t already have life insurance, you’ll want to think about buying a policy once you have a child. Some experts recommend a policy that’s eight to ten times your annual salary for those with young children. Getting pricing and checking on insurers ahead of time means you’ll be ready to purchase when the time comes.
Check out child care costs. If Mom plans to go back to work, you’ll need to consider how to pay for child care, which averages around $1,000 a month.
Think about saving for college. As soon as baby is born, you’ll also want to think about opening a college savings account. The options can be mind-boggling—there are 529 plans, UTMAs, ESAs, IRAs, and more! Visit this resource to compare accounts and decide which one works best for you.
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