Are you thinking about starting a family? Having children is an incredible experience that brings so much love and joy into our lives, but let’s face it, it can also be expensive. As you embark on this exciting adventure, it's important to be financially prepared.
Let’s start from the beginning. As with all things, you will need to create a budget. If you already have one, then it will make it a bit easier to figure out where you can cut back. Yes, this may mean making some lifestyle changes (which are coming anyway), but it will be worth it in the long run. This way, you'll have enough money to cover your new expenses while also saving for your child's future.
First stage: You are thinking about it
Yes, planning for a child begins the moment you start to think about it. There are many items you want to consider to make sure you don’t get caught off guard.
- Check your insurance. Make sure your health plan covers the cost of prenatal care, delivery, and any complications that may arise. You don’t want to be paying a hospital bill until your child is 18. Check your deductible and copayment requirements, so you know exactly what you are going to be responsible for. Explore options like Medicaid (and Florida KidCare) to help keep your medical costs low – especially if you’re a single-income household.
- If you have a favorite doctor, make sure they are on your new insurance plan, if you need to change from your current one. Also make sure the hospital you choose for delivery is on your insurance plan as well. You can always search for new doctors and hospitals through your medical insurance carrier.
- If you have prior medical conditions, consider how this might affect your pregnancy journey. Will this include more doctor’s visits or medication to account for? Don’t forget new conditions may come up during or after your pregnancy. Looking at you morning sickness (why call it that, it's 24/7).
- Check your company's parental leave. Are you covered by FMLA? Does your company support parental leave with paid time off or using vacation or sick time? If you need to take unpaid time, make sure you have enough in your savings to cover it. You may also qualify for your company’s short-term disability benefits – so don’t forget to check those too to help with any unpaid time you may have to take.
Second stage: Pregnancy (or adoption)
Congratulations! You have finally got that positive test and are officially on your way to becoming a parent. Or maybe, you finally got the official paperwork to adopt your son or daughter. It’s an exciting and nerve-wracking adventure, but you made that leap of faith. So, what financial steps do you need to look out for in this stage?
- Childcare is a significant expense for many families, so it's important to plan for it. Whether you plan to use a daycare center, hire a nanny, or have a family member provide care, make sure you budget accordingly. You may also be eligible for tax credits or employer-sponsored childcare benefits, so be sure to explore your options. It may seem early but put your name on the list for your preferred daycare - NOW. Some can have over a year waiting list!
- Once your baby is here, children require regular check-ups and vaccinations, which can be costly. Consider a health savings account (HSA) or flexible spending account (FSA) to help cover out-of-pocket costs. When considering a pediatrician, you can make appointments while pregnant for a ‘meet and greet.’ These visits are free! Once you make your decision, get on their books, as they can fill up quickly as well.
- Babies (once they start moving) will get into literally everything. Don’t forget to account for all your baby proofing items. From electrical plugs to sharp corners, you will want to purchase childproofing items before baby gets here. Trust us, you don’t want to be doing this while sleep deprived later.
- This is not a fun step to think about, but becoming a parent is a good time to review and update your estate plan. Make sure that your will, power of attorney, life insurance, and other documents reflect your new family situation. If anything happens, you want to make sure your family is protected.
Third stage: New baby!
Congratulations! Your little potato is here! This list contains a lot of your everyday items you will need for your new bundle of joy.
- Whether you decide breastfeeding or formula is your way of doing things, each comes with a cost.
- Breastfeeding seems free, for obvious reasons, but don’t forget items for containers for storage, or using a pump if you need it. Some insurance companies will actually supply a pump for free!
- Formula will have the cost of the food itself, plus bottles and distilled water for mixing. A lot of pediatrician offices will have full size samples they can give you as well to help with cost.
- Diapers are another cost to consider. Whether you go disposable or cloth, you will need to budget for wipes, creams, baby powder, etc. When you can, buy in bulk! It will save you in the long run.
- While you may have gotten an overload of new clothes at a baby shower, you will start to realize that most of these clothes will never be worn. Babies simply grow way too fast. Utilize resale shops for basic clothes, then you can spend your extra bit on that full priced super cute outfit at the store you just can’t resist.
- The same theory can be used for toys for your little one. Take advantage of resale shops and hand-me-downs from family. Don’t feel like you need to buy the latest and greatest. Most kids will end up playing with an empty water bottle longer than a $50 toy.
- Start saving for college. yes, now. It's never too early to start saving for your child's education. Look into options such as 529 college savings plans, which offer tax benefits and can be used to pay for qualified higher education expenses.
Fourth stage: Your tiny human
You will hear over and over, they will grow up faster than you think. This also means more things for your budget!
- Ever heard the phrase ‘they are eating me out of house and home?’ It’s likely that whoever came up with this phrase had growing children. As kids grow, so do their appetites. Make a grocery budget, buy in bulk, and look for coupons and deals. Consider making meals at home instead of eating out.
- Soon your child will have some fun extracurricular activities they will want to take part in. These activities, like sports teams, dance classes, and music lessons, can be great for your child's development, but they can also be expensive. Look for affordable options like community centers or after-school programs to help with the cost.
Live moves fast, and as a parent you don’t want to miss a thing. By being prepared, you can sit back and focus on what truly matters, watching your little one grow up.