You finally feel like you’ve gotten ahead: You earn a steady income, have paid down a majority of your student loan debt, and enjoy being a first time homeowner. Now comes one of the biggest decisions you’ll ever make: having a baby. Raising a child is one of life’s biggest adventures. As with most things, it’s not always easy, but here are few ways to help you prepare.
Get a handle on your current fixed expenses and discretionary spending. Knowing where your money is going today can help you make smart decisions about reallocating your spending, and in this particular case, toward the cost of having a baby. Diapers and formula are going to be a new cost. Estimate how much you will be spending on these things each week. Do you need to cut something out to bring these expenses into your spending plan? How will it look? The average cost of raising a child who is born in 2015 to age 17 is over $300,000. [Source: Brookings Institution)
Understand the costs your health plan covers, from pre-natal appointments to first year check-ups. What out-of-pocket expenses will you be responsible for? You do not want to be surprised by large costs upon being discharged from the hospital. Be sure to check what your particular plan covers. Also review plan options after the baby is born. At that point you will need a Family plan if you are not already on one.
Know your childcare and employment options. Childcare is one of the biggest costs associated with having young children. Consider things such as time on maternity leave, going back to work and even staying home with your child. What other childcare options are available to you?
You have many things to think about as you prepare for a baby. Take the time now to map the immediate costs and the resources available to you. By talking through these questions and doing a little research, you will be better prepared to make smart financial decisions when it comes to having a baby.