10 Financial Moves you Need to Make Before Your Baby Arrives
One of the most exciting and rewarding experiences in life is parenthood. It is a school, it is a job, it is a sport, it is a spiritual trip, it is all of these beautiful things and much more. Just like any great adventure in life, it requires meticulous preparation, especially in the financial department. This article spells out some important steps you need to take before, during and after your bundle of joy arrives.
Increase your income
The first step you need to take when you discover that your baby is on the way in boosting your earnings. A baby brings joy, happiness, and expenses that can destabilize you if you are not prepared. You and your partner need to have a serious discussion on how to increase your income before the baby arrives and how to sustain it thereafter. Can you work overtime? Can you or your partner do freelance work or online gigs? Is it possible to negotiate a raise? You should streamline your sources of income to ensure financial stability before and after the baby arrives.
Eliminate credit card debts and other toxic obligations
The second step you should take is to curtail your credit card debts and the very usage of these plastic instruments. Credit card interest payments are nothing short of toxic financial vermin that slowly chew away your economic future. Eliminating them when your bundle of joy is about to arrive is the best thing you can do to yourself and your family. Always work with cash but if you do not like walking around with notes and coins, use a debit card or checks. Most ATM cards also function as debit cards as long as you have money in the bank account.
Draw up a new budget that covers the pre-and postnatal period
With the new responsibilities on the way, you need to draw up a broad budget that will meet your financial needs. For mothers, your income may drop due to the maternity leave and this can cause a decline in earnings at the exact moment when expenses are rising. How will you manage this? Without budgeting, it becomes extremely stressful handling this challenge. Babies also come along with medical, equipment and ongoing costs. Your prenatal budget should enable you to save a pretty pile and direct it to these three areas when the need arises. Once the baby is born, you should also have a skeleton budget to help you navigate the financial high seas.
Create or reorient your financial emergency fund
If you do not have an emergency fund by the time the baby is arriving, you are dancing with the devil. Unanticipated birth complications that require thousands of dollars affect a large number of mothers and newborns even in the most developed countries. While many assume that a pregnancy insurance cover can protect them, there are problems that insurers do not address, forcing clients to pay out of pocket. A rainy-day account’ is the best weapon to deploy against emergencies that may arise throughout a child’s life. The rule of thumb is to have up to 6 months’ worth of living expenses stashed somewhere in case anything goes wrong.
Develop a deep understanding of your insurance cover
Whether you are going to a private or public hospital, your insurance cover is very important because it can secure or ruin your financial status in an instant. Insurance can cut you're prenatal, delivery and postnatal expenses to almost zero. Secondly, having a pediatrician that the insurance company recognizes in its network helps you avoid extra-network charges. Lastly, it is often advisable to place the little one on your health cover immediately after birth. In most jurisdictions, this is possible after about 30 days. Never forget this.
Prepare for your maternity or paternity leave
Most countries and companies across the world cater for maternity and paternity leaves for workers. During this period, your earnings may reduce slightly or even drastically. Whatever the case may be, you need to prepare yourself adequately to absorb financial shocks that may come your way. This is your opportunity to study the laws that govern leaves in your state and company. Will the leave adversely affect your income? Will you need to balance it by going back to work early to avoid losing income? You must make all these decisions at the planning stage.
Plan for your childcare options
Whether you take your child to a daycare center or have a nanny coming into nurse her, the impact will be in your pocket and the earlier you plan for it, the better. Some financially prudent couples even plan childcare options for the first six months of their newborn’s life based on their work and travel expectations. This process involves visiting day care centers and interviewing nannies. Generally, it is better to look for day care centers close to the home to avoid stressing the baby with long trips. As for nannies, face-to-face interviews coupled with a careful study of references will usually yield the best candidate.
The final prenatal activity you need to undertake is shopping!
Buying what your baby needs, from equipment to clothing, works best before their arrival. Reaching out to other parents who already have toddlers is also cost effective. Babies grow quite fast and most parents prefer giving away what they do not need. This is also the time to finalize the baby’s nursery. Many parents already know the gender of their baby at this point and they can decorate this space appropriately.
Start saving for the newborn’s education
It will probably take three to four more years before your kid steps into a school but commencing savings at birth will give you a financial edge when the moment arrives. Parents who do not mind free public schools usually start saving for college immediately after the baby arrives. However, if you have a taste for private schools then the earlier you start saving the better.
Don't neglect your retirement fund
Finally, with all the financial upheaval and reorganization happening, many parents end up diverting their retirement savings to cater for their child. While this is understandable, you have to keep in mind that you will support this baby for only 25 years before they move on. Where will you be financial?