Financial Preparation for New Parents
Preparing for children financially can be very difficult if new parents do not know what to expect. Yes, savings accounts or other savings programs are always good to use, but there are many ways to save money and prepare for your growing family that goes beyond simple savings accounts. You should start by saving money in the traditional sense, but there are other ways to save and prepare as well.
Savings Accounts for Emergencies
Even before finding out that you are expecting a new family member, it is a good idea to save for emergencies. Now more than ever, you should be saving for emergency situations. Most financial planners suggest that everyone has three to six months of money saved in an account. This may not always be possible, but it is important to have a financial cushion available. In the beginning, a basic savings account will be sufficient. If you can save large amounts of money over time, you can upgrade to larger interest-bearing savings accounts. Beginning with just a few weeks of savings is better than no cushion.
College or Future Savings for Baby
This account does not need to have thousands of dollars. Starting with just $50 can be a great way to begin saving for your child’s future. Grandparents, family members, and friends can make deposits for birthdays or other celebrations. These accounts are available from local and national banks so that you can share information about making deposits or ask donors to give you the cash for deposits.
Use Insurance Offers
When expecting a baby there are many things that health insurance offers discounts for or free for members. For example, if you are planning on breastfeeding, moms can get a free breast pump from many insurance companies. These are also very good quality breast pumps as well. After the baby comes, some insurance companies also offer discounts on massages, gym memberships, and other services that may benefit a woman recovering from childbirth and creating a new life. Not every mom will desire a gym membership or massage, but you should look at what your insurance company provides. Discounts are a great way to save money. You could even deposit those savings into one of the accounts listed above.
Plan with the Doctor, Hospital, or Birthing Center
These organizations or offices know what it costs to have a baby with them using your insurance or medical plan. Ask for estimates for final costs and begin making payments as early in the pregnancy as you can. Of course, emergency c-sections, longer hospital stays, and complications can drive costs up, but you can begin by making payments early so that additional costs later are less of a financial burden. Also, as you progress through the pregnancy, if a cesarean section or extended hospital stay seems imminent, ask the hospital, doctor, or birthing center for estimated additional costs and add a little to your monthly payments to cover them.
Plan with Your Employer
Mothers and fathers both need some time off work after the birth of a baby. Mothers will need six-weeks or more in most cases. Fathers may choose to take time off as well. Learn what your options are for leave pay. Do you have enough personal leave to cover the entire absence? What about considering the time you will miss for appointments? Planning your leave and time off is essential to know how much you need to save and prepare for unpaid days. Mothers may also want to ask if short-term disability covers pregnancy. It may only cover if the mother has to leave work early due to complications for conditions such as placenta previa or pre-eclampsia, but if it covers for all pregnancy, this will often reserve your leave time and still provide you with a portion of your regular pay.
Plan with Your Insurance Provider
You may have already considered discounts or other financial savings, but you will also need to know what you need to do to add the baby to the insurance coverage. If mom’s employer-sponsored insurance will not be used to cover the baby, what do you need to do to get a policy on the baby or add the baby to dad’s employer plan? Babies need many doctor’s appointments throughout their first few years. Preparing for how to cover the baby for those visits is essential. Many of those visits will be covered as preventative medicine, so you need to have a plan in place before the baby is born.
Stock Up on Supplies
Most babies use diapers for two years or more. At $30 or more for larger boxes, these costs add up over time. Diapers do not expire. Consider buying a box or two each pay period before the baby comes. Also, consider having a diaper raffle or other game at your baby shower that encourages gift-givers to bring diapers of every size. Wipes can also be bought in bulk or ahead of time. Warehouse clubs such as Sam’s, Costco, and BJ’s carry larger boxes for not much more than their smaller counterparts. Many parents find they save more than the cost of the membership just in diapers or wipes.
Second-Hand Items
Do not buy all new supplies. You should check on the recall status for equipment, but there is nothing wrong with using a crib that your friend no longer needs, buying gently used baby clothes, or passing down an exercise center (often Exersaucer) between cousins. Some equipment such as mattresses, car seats, and baby carriers should never be purchased used or passed down. These items often are recalled, unhygienic, and may be compromised. Car seats, for example, are expected to be thrown away if the vehicle is in an accident. Purchasing a used car seat means you may not know if they have been compromised.
Closing Thoughts
These are not the only ways to save money and prepare financially, but they are a good way to start. Consider developing a will, medical and financial power of attorney, and other legal paperwork as well. Planning early will provide peace of mind and allow new parents to focus on learning parenting skills rather than worrying about the financial impact. Veteran parents, comment with your additions to this list. How did you prepare? What would you do if you were a new parent today.
