How To Navigate Your Finances As A New Parent

There’s a finite window of preparation time for your new arrival. And while you’re rushing to get ready, it’s easy to overlook or not fully appreciate many of the expenses children will add to your budget. It’s a potential parent trap that can be avoided with proper planning, both financially and emotionally.  

Just ask Lance. When he and his wife had their first son, they found you can never overprepare. “We checked all the boxes—at least we thought we did,” he says. “We read all the books, made all the plans. I believe that’s why babies like to laugh and gurgle—they are cracking up at all the preconceived notions they get to confound daily.”

Cassie, mom to a 9-month-old daughter, agrees. “My advice to new parents is ‘brace for the unexpected.’ Be prepared for emergencies. And don’t get down on yourself when things don’t go as planned,” she counsels. “We’re still amazed by how much baby food we go through and how quickly she’s growing out of clothes. People tell you, but you don’t really understand until it’s happening.”

You also need to prepare for the many ways the baby will affect your lifestyle. For example, Cassie didn’t realize how little they’d be able to plan for their own meals, spending unexpectedly on take out and prepared foods.

And the new expenses start adding up before the actual birth. Even if you’ve been saving up for those monthly diaper costs, are you considering maternity clothes? Nursery furnishings? And of course, medical costs: The average cost for maternity care can exceed $8,000, depending on your healthcare provisions, location and delivery procedure.

Getting better baby-ready

So what can you do to identify those hidden expenses and get even better prepared for your new addition? Here are some tips:

• Take Inventory—Before you know what you need, you need to know what you have. Look carefully at your income, then map out your current expenses. “We looked at our income and expenses to get a reasonable estimate of what a baby would cost per month,” Cassie recalls. “Things like daycare, food, clothes, all that. It helped us better understand what we’d have to change.”

Once you know what you have and what you’re spending, calculate your estimated baby budget. It’s better to estimate on the higher end and adjust your current spending accordingly.

“Get the major costs identified,” Lance recommends. “Figure out how you’re going to pay for or finance them. Stuff like diapers will get figured out along the way.”

• Debt Management—If you’re like most people and owe a little here and there, don’t panic, but be sure you have your cash flow under control. Juggling is a lot harder when a baby factors into the budget. Consider consolidating your debt and look at other strategies for reducing financial stress.

• Increase Your Emergency Fund—A new human is completely unpredictable. So, take Cassie’s advice: “Save, save, save! You’ll always need ready cash for the baby, and you’ll never compromise when it comes to your kid.”

• Research Daycare—You’ll need a childcare plan if and when you go back to work. If family members aren’t an option, start researching daycare options in your area. Compare costs and quality—the average cost of full-time care for kids in the U.S. is about $9,589 annually. And the price tag varies depending on what area of the country you live in and your specific needs.

• Review Insurance Plans—Adding a baby to your health insurance plan can cost an average of $400 per month, depending on your healthcare provider. Check with your insurance company before your baby is born to review your options. Also, be sure to update your estate planning, including life insurance, wills, guardianship and healthcare powers of attorney, among other important family planning steps.

• Don’t Splurge—Of course babies are exciting, but don’t blow your budget on nonessentials before the birth. You’ll need that money later. “In retrospect, we probably should have spent less on the nursery,” Cassie notes. “It’s only natural to want your baby’s room to be beautiful, but babies don’t need much in the way of furniture.”

• Ask for Help—Every parent has gone through what you’re experiencing, so ask for help. “Ironically, new parenthood can make you feel isolated and lonely,” Lance says, “but thousands of people are going through the exact same challenges every day. Life and money can get confusing or frustrating, but don’t go it alone. There are plenty of resources to turn to for help.”

• Expect Surprises!—You won’t be able to predict all the ways life will change with your baby, so be prepared to adapt and improvise. But with a little planning, managing your family’s finances could be a little easier.

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Source: https://www.forbes.com

Image Credit: offset

Theresa Todman, Managing Partner/CEO of B&M Financial Management Services, LLC . Theresa works with small business owners and entrepreneurs to assist them with financial management and creating organized systems and procedures. She specializes in bookkeeping, accounting, QuickBooks solutions, small business tax issues and consulting.

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