If you’re feeling the urge to have your first baby, you’ve probably spent the past few months or years imagining what your future baby will look like, what names you like, and how adorable they’ll look in a onesie with little ducks on it (so adorable!).
But when you’re planning to have a baby, you need to plan for more than nursery color schemes. Babies need more than onesies and love, y’all. Babies can be expensive. A child costs nearly $250,000 to raise until age 18, and that doesn’t include college!
That seems like a daunting figure, but you can take advantage of the pre-baby years to prepare your finances as much as possible. I’ll walk you through all the things you need to consider.
Health Care for Mom and Baby
Prenatal care is essential, and it includes doctor visits, vitamins, and childbirth classes. Many of the medical costs of pregnancy and childbirth are now covered, but your insurance coverage may vary. Some new moms pay very little out of pocket, and others are on the hook for a few thousand dollars. Check with your insurance company now to find out how much the cost of childbirth is under your plan.
If you have a High Deductible Healthcare Plan (HDHP), you may be out a few thousand up front, but then find out what happens after you meet your deductible. Sometimes it’s 100% covered, other times 80% of the costs are covered and then you’re responsible for the other 20%.
Find out if your HDHP is eligible for a Health Savings Account (HSA). Start building up your HSA now, to use for health care costs in the future.
After your baby is born, they’ll need checkups every couple of months for the first two years. While you’re checking on your prenatal insurance coverage, ask about the cost of adding a child to your health insurance policy, and what co-pays you’ll incur for their doctor visits.
Taking Time to Recover and Bond
Talk to your HR and benefits representative at work to know what options are available to you for parental leave. The U.S. is one of only two nations that doesn’t require employers provide paid maternity leave. Luckily, most employers offer some sort of paid maternity leave.
If you work for a company with 50 or more employees, you’re eligible for 12 weeks of unpaid leave after you give birth or adopt a child because of the Family and Medical Leave Act (FMLA). Many parents use a combination of unpaid leave, short-term disability, and stockpiled sick and vacation time.
If you’re taking unpaid leave, your household budget is going to take a hit. Ideally you already have emergency savings, but try to save up an additional savings to cover the time you won’t get paid.
The Great Child Care Debate
If both parents plan to return to work, you’ll need to plan for child care. What works for your family depends on a lot — if you have relatives nearby who can help, or if nannies are more cost-effective than day care (or vice versa). Explore your options before you get pregnant, because in some cases (like day care) you need to get on waiting lists as soon as possible. Day care can cost nearly $2,000 a month in some cities, so this is an expense to save up a lot for!
Some parents decide it makes the most sense for one parent to stay home full-time. In this case, you’ll not only want to adjust your household budget to stretch one income further, you’ll want to protect that one income with disability insurance, in case illness or injury derails the working spouse’s ability to work.
If you’re part of a dual income household, I recommend that you start living off of one partner’s salary and use the other to fund your financial priorities.
Bigger House? Bigger Budget
When your family grows, the size of your home usually grows with it (but it doesn’t have to). While you expect your rent or mortgage payment to go up when you move to a bigger place, don’t forget some of the hidden costs.
Your electric bill is about to go up each month — especially if you moved from a one-story place to a multi-story one. Those additional floors heat and cool less efficiently, affecting what you spend on utilities in a big way.
If moving to a bigger home means moving further away from your job, your transportation costs will rise, too. Some couples that previously made do with one car will need to buy a second one. Don’t forget to factor in these costs. Don’t get sucked into buying a new car just because you’re having a baby!
And of Course, the Stuff
Babies need a crib, car seat, clothing, and toys. The Baby Industrial Complex will make you feel like a terrible future parent if you don’t provide your baby with the most expensive versions of everything, but you don’t have to fall for that.
Save money by polling your parent friends to find out what gear they actually used, and what they bought and never took out of the box. Take part in clothing exchanges to get maternity and baby clothes for free, or shop at consignment stores. You can provide fun toys, safe cribs and car seats, and cute clothes on a budget!
You’re Going to be an Awesome Parent!
Having your first kid is a fun, crazy, scary, wonderful whirlwind. Take some of the edge off by doing your research, adjusting your budget, and saving up vacation and sick time. While there’s no amount of preparation that will make you feel totally ready, you’ll worry a lot less about money. And that’ll free you up to enjoy the fun stuff!