Having a baby is probably one of the most dramatic financial curve balls life can throw at you. Who would have thought that something so insignificant could have such an impact on how you earn, spend, and plan for the future.
In this blog article, we’ll go over how to financially prepare for the arrival of a baby. Whether you’re holding a positive pregnancy test or starting a family through adoption or surrogacy, there are universal steps that everyone can take to smooth the way.
1. Assess Your Current Situation
First, assess your current situation. Before you even consider what will change, it’s critical to understand where you stand right now. Examine your earnings, expenses, assets, and debt.
If your day-to-day finances are a mystery to you, you can learn more in my other course, Financial Wellness: Managing Personal Cash Flow, or in Jane Barrett’s course Personal Finance Fundamentals.
Examine your insurance policy and any benefits provided by your employer. If you live in the United States, the Family Medical Leave Act allows you to take up to 12 weeks of unpaid leave following the birth of a child or to welcome an adopted or foster child, but the law only applies to businesses of a certain size, and it only allows for unpaid leave.
As a result, any paid benefits are at the discretion of the employer. When you are unable to work due to an injury or illness, including pregnancy, some states provide short-term disability benefits.
Additionally, a few states now require employers to provide paid leave. Check to see if you live in one of the states where this is applicable.
2. Consider How a Baby Will Fit Into Your Current Situation
Now consider how a baby will fit into this situation. Will your income be disrupted after you bring the baby home? Perhaps you intend to have one parent stay at home.
Start preparing now, in either case. Look for ways to reduce your spending and increase your savings, and get serious about paying off any debts you may have. Of course, we all wish we had an infinite amount of money to spend on our children’s care and upkeep.
3. Start Considering Childcare Options Now
It’s upsetting when financial constraints dictate the type of childcare or education you can afford. As a result, we want to give ourselves as much space and time as possible to gather information, identify options, and determine priorities.
I recommend that you look into different price points for each of these measures. Consider the differences between group daycare, a private nanny, and a nanny share, and then consider the housing and transportation costs in various school districts. This allows you to begin analyzing and comparing which expenditures are most important to you.
Remember that these decisions can feel complicated and intense; take each step slowly and avoid the temptation to rush. Make sure to discuss these options with your partner as you gather information. New parenthood is often a time when values and priorities shift dramatically, so don’t assume you know what you’re doing.