- The parent-child relationship is beautiful, but giving birth to a baby is a very costly effort and requires preparation.
- Creating a baby budget will greatly help for all the costs you need to cover as a parent.
- You also need to create a childcare leave system and think about how to handle large amounts of medical expenses.
- Read more from Personal Finance Insider.
Being a parent is a milestone in life and an important financial decision. Parenting isn’t cheap — the average cost for 18 years was around $ 287,000.
From taking a break from work to budgeting for childcare and saving for long-term goals like college, there are many financial implications to consider. Preparing children can be an extra financial burden for women who often have to overcome unique factors such as maternity leave and medical care.
According to a Pew Research study, women are often responsible for most of the childcare and household chores, and in addition to full-time work, they are not even the disproportionate burden faced by women.
As a Certified Financial Planner, I help individuals and families make the most of their money and plan ahead for their financial future — and becoming a mother is a big part of it. Here are three things I always say about pregnancy finance plans.
1. No plan is better than no plan
It’s easy to be overwhelmed by the laundry list of items to buy and the actions to take when preparing a new baby. But even with a basic plan, having a financial plan can give you a sense of security and make you feel ready to raise your child.
I encourage women to start planning as soon as possible. First, check your current financial situation, including checking your cash flow. If you have a partner, this is a great opportunity to sit down with them and discuss your plans.
Turning over your consumption habits can be exhausting and sometimes even painful. However, knowing where everything comes from and where it goes can help you plan your game for a growing family.
Next, create a “baby budget”. Brainstorm future regular childcare costs such as diapers, day care and baby clothes and record them in a spreadsheet along with other necessary monthly costs such as rent, mortgages, utilities and groceries. When your baby arrives, if you know the new monthly cost, you can budget accordingly.
Your family is growing, but that doesn’t mean you should run out and buy a bigger home or car. These costs add to the budget, especially when combined with childcare costs. The same applies to all these trendy baby products — your child will probably grow beyond most of them. Consider buying second-hand goods as much as possible.
2. Make a childcare leave plan
Check your company’s parental leave package to see when your employer is allowing you to take off to take care of your child.
Unfortunately, many companies do not offer this benefit. According to the Kaiser Family Foundation, less than one in five people have paid parental leave.
The United States is one of the only developed countries that does not have a federal paid parental leave system, but the United States has the following laws: unpaid Leave. Eligible parents, known as the Family and Medical Leave Act, are allowed up to 12 weeks of unpaid leave. Check state policies as some states offer their own paid vacation programs.
If your job does not offer paid family vacation, you should buy short-term disability insurance that covers a portion of your income while you are absent from work taking care of your new baby. You may want to consider it.
You can ask your employer if they offer a short-term disability or buy your own private plan. Most insurance lasts only a few months — if you plan to take more vacation, consider long-term disability insurance.
3. Avoid large medical expenses
We have all seen the horror story of a new parent who was hit by spectacular medical expenses after being discharged from the hospital. The last thing you want is to deal with insurance claims in the first few weeks with your new baby.
As a female giving birth, it is imperative to review your health insurance policy to see what is covered and what is not covered regarding childbirth.
One of the benefits of a 9-month pregnancy is that you have time to see everything. Therefore, make sure that the hospital you plan to give birth to is in the network. The same is true for all doctors who will work with you.
Most newborns need to have their first medical examination within a few weeks, so finding a pediatrician in the network before the bunch of joy comes can reduce future headaches.
If you have high deduction health insurance, consider making the maximum contribution to your medical savings account. Donations to the HSA are tax deductible and can be used for medical expenses, including childbirth.
If you do not have health insurance, it is highly recommended that you do so (the average out-of-pocket cost for childbirth ranges from approximately $ 3,300 to $ 5,100). Pregnancy is eligible for special enrollment. This means you can buy a health insurance plan or switch to a partner plan. It’s best to do this as soon as possible.
