When most parents find out they are expecting there is usually a period (sometime long and sometimes short) when the parents feel a sense of shock. They look at their lives and know there is going to be a lot of changes.
In our post today we are going to look at the financial changes and decisions every expectant and new parent will need to discuss.
5 Important Financial Discussions For New Or Expectant Parents
Can You Start Saving For College?
Can you make room in your budget for small monthly contribution to college savings?
If you are finding it hard to do both retirement and college you might want to consider the advantage of using a Roth IRA for college savings. This way you will have the flexibility of saving for college and potentially using some of your Roth to help fund juniors school.
The sooner you can start investing the better.
Do You Have the Money For Hospital Bills?
The cost of having a baby can be quite expensive. Be sure to review your current health insurance plan to see how much of the delivery cost you will need to pay. Once you know how much your insurance will cover you can just check with your doctor to get some estimated costs.
If you do not have insurance I strongly recommend you contact the doctor now and ask about a discounted rate for prepaying in cash.
Will One Parent Stay Home?
The sooner you can establish your income the sooner you can make the necessary spending adjustments. In fact if want to see if you can afford to be a stay at home wife then you should start living off one income today. The allows you to test the one income lifestyle and also helps you build up a bigger emergency fund for the hospital costs and start up baby cost.
Have You Simplified Your Finances?
When baby comes life will be very different. You’ll probably be amazed at how such a little human can disrupt the normal flow of life. When we had our first daughter we had a lot of sleepless nights. I’d crawl into my classroom (I was in graduate school at the time) and then I crawl over to my evening job before coming home.
Time and sleep were precious resources.
Before having the baby I would suggest that you get your finances organized. Be sure you’ve got a good personal finance software and automate some of your payments. When life gets busy financial organization seems to be one of the first things to go.
How Much Will You Spend on Baby?
Babies are peculiar things. They require everything to be custom made. You’ll probably be spending money on anything from clothing, to cribs, to change tables, to toys. At the end your previously fat wallet will look extremely skinny.
Sit down as a couple and agree on how much to spend on baby related products. Don’t worry if you are frugal you will find ways to save on baby too. For example, we bought used baby furniture (gasp!). We’ve given our kids cups to play with in the bath and we’ve even decided to use cloth instead of disposable diapers (yuck).
Set a baby budget and stick to it. Don’t worry friends and family also usually like to spend money on baby.
What other important financial decisions did you need to make when you had kids?