Financial Preparing for a New Baby
We've put together a list of some recommendations on how to avoid some of the stress out of the financial side of your growing family, even before the new baby arrives.
1) Remember to Plan For New Costs
New babies mean lots of new expenses. And while a lot of these expenses can thoroughly be prepared for, there will likely be a few that are overlooked. For example, when cooking meals at home, you need to consider that once the new baby comes along you are going to be extremely tired, therefore meaning you probably won't be cooking near as much. Have you calculated the cost of ordering take out? What about cleaning your home? Once the new baby comes along, you probably won't have the energy to do a lot of cleaning, so you might end up hiring someone to clean your house for you. Have you planned for the expense of hiring someone to keep your home clean?
2) Avoid buying new all the time
Buying brand new items for your baby is great, but when it comes to your finances, buying new can become a burden. Sure, diapers are needed and a few new pieces of clothing, but for the most part, raising a baby doesn't mean having to have the best of the best. Instead, you can easily invest in hand-me-downs as well as second-hand baby furniture.
3) Dont put off saving for college
Once you have your new baby, the last thing on your mind is saving for his or her college fund. And while itll be many years until the little one heads off to college, its important to be thinking about the cost of college long before their high school graduation rolls around. In fact, the younger your child is when you start saving for their college, the better off your finances will be. Fortunately, there is a 529 college plan you can invest in, which gives tax advantages, and can help maximize the use of the money towards college expenses.
4) Manage your housing costs too much on a mortgage
When having a baby, you want to have a nice place to bring it home to, but what many need to realize is that spending too much on a mortgage can put them in a tight financial squeeze. If you are planning to have a baby sometime in the next 15 to 20 years, consider how your monthly mortgage payment is going to affect your finances. You may find that a lower monthly payment will make it less financially stressful once the baby comes.
5) Have an emergency fund saved up
Another way that new parents fail to prepare for the cost of having a baby is by not having money in their savings. A few hundred dollars is, of course, a great place to start, but several thousand should be the goal. In fact, you want to have enough money in your savings to cover at least six months of bills in the event something happens and you were no longer able to work, such as after a having a baby. With several thousand dollars in the savings account, this gives you the option to stay off work for a few months until you are comfortable with leaving the baby with a babysitter. Having this option makes the transition of going back to work a lot simpler, especially for moms who don't get to take advantage of any type of paid maternity leave.
These tips won't solve all your problems. Having a baby will always be scary and overwhelming, no matter how much money you have or how well you manage your expenses. It's the price you pay for the greatest gift you will ever receive in life, but the price doesn't have to be as expensive as many think. Take the time to prepare and organize your financial plan and you will have one less thing to keep you up at night.
This content created by David Gaylor in conjunction with Fusion Capital Management.
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The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by radical promoting and their editorial staff based on the original articles written by jeff cutter in the falmouth enterprise. This article has been rewritten for David Gaylorand the readers of David's Family Finance. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security.