Becoming a parent changes your life, and that includes your finances. Take diapers, for example. With 120 diapers costing around $40 and newborns needing them up to 12 diaper changes in a day… well, you don’t have to be an accountant to recognize that your spending is taking a hit.
So, in addition to attending birth classes and checking your pregnancy apps daily for updates on the baby, make sure to prepare yourself financially as well. Here are five basic steps to follow:
- Understand your health insurance.
- Get life insurance.
- Create a will.
- Adjust your family budget.
- Build your emergency savings fund.
There’s always more you can do, but start with these five steps to give yourself a solid financial foundation as you welcome your adorable baby into the world. Keep reading for more details.
Understanding your health insurance and adding your baby to your plan
Wouldn’t it be nice if your health insurance provider automatically added your newborn to your plan so you could focus on newborn cuddles instead of paperwork? Unfortunately, that’s not how it works. Be sure to contact your insurance provider or employer between diaper changes and naps! Plans usually give you 30-60 days after the baby is born to make changes to your plan.
It’s also important to know what maternity and baby benefits your plan covers (and doesn’t cover) so you can plan ahead.
“Even with insurance, you could still owe thousands of dollars for prenatal care and childbirth. On the plus side, some insurance plans cover additional services that you might not expect, such as visits from lactation consultants,” Jessica Sillers told moneygeek.com. “If your hospital bill is higher than expected, keep in mind that you have the right to request an itemized bill so that you can verify each expense.”
Get a life insurance policy
Having life insurance can provide invaluable peace of mind when welcoming your little one. Like other insurance that charges a monthly premium, life insurance is there to financially protect you and your family in rare, downside scenarios.
“What a lot of people don’t realize is how affordable life insurance, especially term life insurance, can be,” Janet Berry-Johnson told Forbes. “For young, healthy adults, term life insurance policies can cost less than many music or video streaming services per month, providing the financial protection your family needs in the event of an unexpected tragedy. “
Term insurance lasts for a set period, usually 20 or 30 years, or enough to cover children through legal adulthood. These policies usually have a fixed premium.
Create a will
Updating your will, or creating one in the first place, is essential for new parents. This will ensure that your money and other assets will go to your child and will be taken care of by a trusted guardian in case something happens to you.
When writing your will with a lawyer, it’s also a good idea to sit down with your parents and potential guardians of your children to discuss your wishes. These conversations will facilitate the execution of the will if the need arises.
Adjust your family budget
Caring for a baby can be quite expensive, and it’s much easier if you carefully review your household budget and make adjustments if necessary. Sometimes, however, we make things harder than necessary!
“If this is your first time having a new little one, you should know a little secret: Babies don’t need a lot to be happy,” Sillers said.. “A clean bottom, a full belly and lots of cuddles usually do the trick.”
Talk to your friends who have babies to get an idea of what you do and don’t need and how to save money. And try tools like a baby cost calculator from http://babycenter.com to help you get an idea of what to buy in your specific situation and how much it might end up costing.
Build your emergency savings fund
If an unexpected medical bill were to happen to you, do you know how much it would cost you? According http://healthcarefinancenews.comyou can expect to pay “more than $1,200 for services provided by anesthesiologists, $2,600 for surgical assistants, and $750 for childbirth-related care.”
Unexpected medical bills or other surprise bills can be especially stressful when you have a new baby to care for, and if you find yourself unemployed, the stress can be overwhelming.
“That’s why it’s helpful to have an emergency fund that will cover six to 12 months of living expenses in the event of layoff or job change,” Berry-Johnson said.. “An emergency fund is especially important if your family depends on the income of just one family member.”
Preparing for parenthood can seem like a daunting task, especially when you consider all the financial aspects of welcoming a new baby. Start with the basics by understanding your health insurance, buying life insurance, creating a will, adjusting your household budget, and building your emergency savings fund. These steps will give you peace of mind as you begin the exciting journey of parenthood.