Edna J. Le Shan once said, “A new baby is like the beginning of all things – wonder, hope, a dream of possibilities.” Of course, what Edna didn’t mention is that kids come with a pretty hefty price tag. Having a baby should be a celebration of life, and not a cause for financial grief. My mother will tell you that you’ll never have enough money saved up to have a child, so you might as well just go for it. I, on the other hand, believe that if the proper planning is done for your household finances both pre- and post-baby, you can avoid feeling a pinch. Because the one thing you definitely want to avoid is having your pregnancy and delivery, a joyous time of your life, negatively impact your finances and drag you into debt. I’ve been told that kids only get more expensive with age—don’t even get me started on college expenses—so it’s a good idea to keep your finances, credit score, and wits in good shape for your first newborn. Below are five ideas that I’ve gathered to get all your ducks in a row for your pregnancy, delivery, and extra costs once the baby comes.
1. Check your insurance coverage
First and foremost, it’s important to figure out how much it will cost you throughout the pregnancy, and then of course the actual delivery. Find out what the co-pay is, how much your deductible is, and what the cost will be for both mom and for baby on delivery day. According to WebMD, in 2008 an uncomplicated cesarean section costs around $15,800 and an uncomplicated vaginal birth was approximately $9,600. It’s a good idea to find out what costs your insurance will cover, and also how much it will cost to add your newborn to your plan.
2. Find out how much maternity and paternity leave you get
The Family and Medical Leave Act (FMLA) was passed in 1993, entitling most workers up to 12 weeks of job-protected leave from their employers for the birth or adoption of a child. Figure out how much time off you and your spouse will each get from your respective jobs. Some companies offer paid maternity leave, but it’s far from the norm in the US. Babycenter.com states that new mothers will most likely use a combination of short-term disability, sick leave, vacation, personal days, and unpaid family leave if her employers do not offer maternity leave.
3. Put together a realistic baby budget
Sitting down and making a budget should prompt some good questions to which you and your spouse will then need to figure out, such as will you need day care or is one of the parents planning on staying home? Will you breastfeed or use formula? (If you breastfeed, don’t forget to factor in the cost of a breast pump to your budget.) Babycenter.com provides a useful baby calculator to track everything from diapers to a stroller to doctor’s checkups within baby’s first year. Also, I would advise you to make sure to plan for those weeks or months of maternity and paternity leave if they are going to be unpaid.
4. Be realistic about what baby needs
The fundamentals of what a newborn requires are things like a car seat, a crib, diapers, wipes, a changing table, baby clothes, and a baby monitor. Vast amounts of toys, a swing, diaper pails, more than one stroller, wipe warmers, designer baby clothes, and elaborately themed sets are all “extras” and definitely not necessities. My advice is to buy what you absolutely need first, and wait for the baby shower to register for the non-essentials.
5. Practice living on one income
That’s right, start saving folks. This is an incredibly practical exercise for two reasons. One, it helps you stash a good amount of “nest egg” money before the baby comes. Second, if either you or your spouse are planning on staying home with the baby and not returning to work, it’s much easier to live off of just one paycheck after having some practice at it as opposed to when you’re sleep-deprived with a newborn in the house and used to living off of double the amount.
DK is an avid finance blogger. You can read more of his stuff on RoadFish.com