Are you financially prepared to start a family?
You've entered the stage in adulthood where you and your spouse or partner are serious about starting a family. As with any major life decision, there are serious financial implications. Adding a new member to your family is a joyous and life-changing moment, but there are financial implications involved, according to NerdWallet.
Big expenses involve doctor visits, home renovations for the baby's new room and of course, diapers. There are some other financial obligations new parents may not have accounted for, but should before starting a family.
Plan ahead of time
Months before entering the delivery room or contacting an adoption agency, couples need to meticulously plan out their finances for the upcoming months. While you may have health insurance, hospital costs can still get quite expensive. You'll want to talk with your insurance provider to see what's covered, and if so, how much you'll need to pay out of pocket. Couples should also see how insurance plans will change with the addition of a child.
The next important area of your planning phase will involve maternity and paternity leave. Both partners will want to discuss time off from work with their respective employers and see if they'll still be paid. Furthermore, you should research the state's laws regarding parental leave. California, New Jersey, Rhode Island, Connecticut and Massachusetts are the only states to offer paid family leave for employees, according to the U.S. Department of Labor. If you work in the private sector in another state, your employer may offer a different set of benefits.
Paid or unpaid maternity and paternity leave can have a huge influence on your budget. Obviously, if one parent is not being paid, finances will be stretched thin during the first year of the newborn's life.
What to budget for
You should group your baby-related expenses into two categories: essential and optional. The essential expenses are items like diapers, food, strollers, a crib and potentially baby formula. Most of these items will be recurring monthly expenses, and they should be at the top of your priority list.
On the other hand, optional items are those that you may need at some point. For instance, while a stroller is necessary, you'll want to limit how much you spend. You can opt for the basic stroller, or if you have enough money, a more advanced version. Some strollers even come with front headlights, an LCD display and a phone charger, according to Wired Magazine.
Another optional expense you may want to consider involves home improvements for the newborn. You may want to consider fixing up a spare room to make it more baby-friendly. If you find yourself on a budget, you can utilize some thrifty methods to save money and create a welcoming nursery room. You can try creating your own wall art, asking friends for help and buying used cribs and changing stations, according to U.S. News & World Report.
Plan for emergencies
Every family should have a savings account before a newborn is added to the family. This account, which should be shared jointly so both parents can add to it, should be used for emergencies only. Unexpected events are never planned, so you'll want to have an emergency fund that has three to six months of living expenses, according to NerdWallet. Ideally, this savings account will have been created long ago and consistently maintained. Saving money will go a long way. If not, both partners should create this emergency fund and deposit money into it the months before bringing a new child home.
Welcoming a baby is always an exciting moment for a family. Both parents, however, need to properly plan their finances to ensure everything goes smoothly with regards to caring for the child and the family's budget.