When you find out you’re expecting, you’re elated at this pivotal event. However, fear can enter the picture when you realize that with that small bundle of joy comes a large bundle of financial changes. With estimates of raising a child reaching upwards of $200,000, changing diapers and getting up at 3 a.m. suddenly seems less daunting than the new stack of bills and tax information coming your way. You don’t have to let finances dampen the experience, though. Here are ways to plan ahead financially to get your numbers on track before the stork drops in.
This is the time to create a new budgeting system for your family. Know the amount of money coming in and amount going out. Know where all cash is going. Don’t consider any expenses too small to count, because nickel and diming quickly adds up.
This is also time to give focus to commercial debt you may have incurred. If you have high credit card balances, put effort into lowering them. If possible, consolidate balances onto the card with the lowest interest rate. Contact the companies to see whether you might be eligible for lower rates and fees. Also check out your credit scores to make sure everything is in order. After all, the higher your credit scores, the lower interest rates you may be eligible for if you are faced with large expenses in coming months. Upload financial software to help track expenses. This will also assist you when tax season arrives and you are faced with a multitude of new tax options.
Check with human resources to confirm what you are entitled to in regards to maternity and paternity benefits and leave. If you are taking unpaid leave, it’s wise to note this income change in your budget. Decide whether you will be returning to work after leave. If not, take that loss of income into consideration. If going back, childcare costs need to be addressed and you should begin researching options and requesting referrals.
It is the final stretch before the baby arrives, which means you need to think through tough decisions that will be even tougher once hormones and sleep deprivation take its toll. Check into life insurance and create a will that eases your mind in case of tragedy. On a lighter — albeit more expensive – note, this is a good time to research educational accounts and college funds. Finally, check into health insurance for your new addition. It is likely that your baby will be on your policy the first month, but you will need to enroll them in one of their own soon after.
Finances may not be the most enjoyable part of being a new parent, but if you take the time to get money matters on track now you will have more time later to enjoy the rest of the ride.