Financial Planning for New Parents
The average cost to raise a child from birth to 18 is over $230,000 – according to the U.S Department of Agriculture. Becoming a parent is a huge deal (in more ways than one). The way you spend your money will change. Your expenses will increase immediately. That’s why it’s never too early to draw up your financial plans for a new baby!
- Start strong! A new baby is exciting, and calls for a celebration! Make sure a family member, or yourself is planning a baby shower. It might be a small event but this can be a huge head start! The gifts you receive are things you’d normally have to pay out of pocket for. Your family and friends want to support you. This is a great time for celebrating and gifting.
- Examine your current budget! Certain things you spent money on before will no longer be essential. Now is the time to eliminate unnecessary expenses from your budget. This will help you save more money and increase your emergency fund – emergencies are more likely to happen with children. You’ll have new expenses – some will be reoccurring. Make a list of things like diapers, wipes, and formula etc… Rework your budget to accommodate the new baby expenses.
- Be proactive! Insurance is a must. Medical, life, and disability insurance are all imperative. Keep in mind, there could still be out of pocket expenses with insurance.
- Medical coverage is needed from the beginning of pregnancy. From prenatal doctor visits, up until your little one is an adult themselves!
- Most employers offer disability insurance to their employees. If your employer doesn’t, do some research on different insurance providers that are self-pay, so you can find the best match for your budget.
- Life insurance will help your family in the event that the worst happens. Death isn’t our favorite topic of discussion, but it happens, and can be unexpected. Make sure your family is taken care of no matter what.
- Be prepared for change! As your baby grows, your expenses will change. Soon, diapers will be an expense of the past! Continue to plan ahead. Childcare will probably be your biggest expense. Childcare rates decrease as your child gets older, however, the starting rate for a 6 – 18 month old is $200 to $300 per week, that’s up to $1200 a month in child care expenses!
- Plan for the future! Start a college fund now! The earlier you start saving for college the better off you’ll be. By time a child born in 2018 leaves for college, the projected tuition cost will be starting at $25,000 yearly on the low-end. College may seem so far from now but like they say, “kids grow in the blink of an eye”
All of these new expenses can seem overwhelming, but don’t stress! We can’t predict every curve ball parenting will throw at us, but there are expected expenses that we can plan for, and unexpected expenses we can save for! As time goes on, you’ll become a master at parenting.