As soon as you know you are expecting, or your partner or spouse is, it’s time to get to work. Take a 360-degree look at all of your income, expenses, and insurance.
Begin a budget that will account for not just your present expenses, but also things you will need to buy for baby and future necessities.
Start Using Financial Software
It can help you track your expense and manage your budget.
Try instituting a spending freeze and savings surge by looking at your budget and trimming the fat. You need to make the most of your income and save as much of it as you can in order to cover lost wages in relation to the pregnancy and maternity leave.
Make a list of how much each of you brings home each month. If one of you has an unpredictable income, such as through running your own business, working on commission, or working in a service job that relies on getting tips, estimate by taking an average of your best month and your worst month.
Centralize all the paperwork and bill paying. The last thing you want is to pay late fees. If you have credit card debt, assess how much you owe and try to pay down part of it. This will increase your credit score in a number of ways, including what is termed your credit-to-debt ratio. Basically, this means you want to owe less than 40% of what you earn in a year. The lower the ratio, the better.
Next, write down all your essential monthly expenses, such as rent, mortgage, utilities, car costs and/or transportation costs to and from work, and so on. Anything other than these essentials and some food will be a luxury.
Opt for In-Network Doctors
Be sure you gynecologist/obstetrician is in your network. Choose a pediatrician who is as well. Babies will have to go to the doctor regularly, so this is one of the best ways to keep your costs low.
Determining Your Maternity Benefits and Health Care Coverage
Be sure you are clear about what you are entitled to. Check co-pays, deductibles and so on to determine how much you can expect to pay for your ob/gyn services. Also determine costs between natural birth and a Caesarean section, which can often be done on an emergency basis if the labor does not go quickly.
Check all of your insurance statements, co-pays and other paperwork and keep them all in a safe place. In the US, if you spend more than 10% of your salary on medical expenses, you can deduct it from your taxes. This can include treatment, medication, and even transportation back and forth, so keep good records.
Other Forms of Insurance
In some cases, employers offer both long-term and short-term disability. Be sure you understand your entitlements. In terms of long-term disability, it will often pay only around 66% of your regular salary, but in some cases you can buy up on the plan so it will be as close to your regular salary as possible.
Be sure you have life insurance. Hope for the best, prepare for the worst and no one will ever have an unexpected surprise. You will need the full details of each person you wish to list as a beneficiary.
Take the time to discover the different types of life insurance. Some can actually be used to invest money for future financial security.
Apply for a Social Security Number as soon as Baby Is Born
Add their data to your list of beneficiaries for your insurance, if you so choose.
Order Official Copies of Baby’s Birth Certificate and Keep Them in a Safe Place
An official birth certificate is an important document that will be needed for various reasons throughout a person’s life, including getting a passport.
Order a Passport
Talking of passports, if you have family overseas or you and your spouse do a lot of travelling, order a passport for your new baby as soon as the doctor says it is safe for baby to travel.
Ask a Family Member to Open a 529 College Savings Account for Baby
A 529 account is like a 401k, but the money will be payable directly to a school or college or used for supplies and books. It can be used to pay for K-12 and college, and student loans. Do not open it yourself, however, as any money saved would be taken into account when assessing your child’s financial aid package.
Instead, ask a family member living in your state, if possible, to sign up. Give them the social security number. Review the mutual funds prospectuses to choose the best investments for the money.
Ask the account holder to apply for a Upromise credit card that will give cash back on all purchases. Link your loyalty cards for supermarket, gas, and so on to the account, which will also give you automatic savings.
Make a Will
This sounds morbid, but unexpected things happen every day and passing away without a will can lead to all sorts of administrative issues for the family you leave behind.
Consider Getting Life Insurance for the Baby
No one likes to think about anything going wrong, but for a small premium, you can get a policy that would cover end of life and funeral costs in case the worst ever happened.
Sort Out All Your Important Financial Paperwork before Your Due Date
Many people leave things until the last minute and end up with chaos. File your taxes, pay your bills online or via mail, and set up auto pays if you or your spouse have a regular income being directly deposited into a bank account.
Make a list of credit card due dates if you owe any money and count back ten days to when you need to send a payment in the mail or online. The last thing you want are late fees or overdraft charges.
Re-Calculate Your Budget for the Two Years
This can be hard to predict, but with the average cost per year estimated at around $12,000 to $14,000 annually per child, add $1000 per month to your estimated costs.
Take into account one partner not working, and/or the scenario of going back to work and needing daycare and more. Your new family budget will constantly feel as though it is a work in progress but do the best you can to keep track of what things cost and try to get by on one income. Some couples find they get so good at it that the second salary becomes savings, not spending money.
You might also discover, as many people do, that it might cost you money to hurry back to work too soon because you have to start paying for childcare. Two final things to consider as a couple are:
* Who do you want to raise your child during their most formative years?
* Are there ways to make the most of you deciding to stay at home?
Consider Your Earning Options
There are a number of ways to boost your earnings before baby, and which can help you tick over afterwards.
Will your company let you work from home? Or would it be possible to start your own business from home such as online, for automated income such as through selling ebooks or affiliate marketing (selling products for a commission). Once the baby gets into some sort of routine and you’ve got your housework under control, you can make the most of your chance to be at home.
You might also be able to do freelance work in your area of expertise while you are home with the baby. Some women even take in other children who are too young to be accepted by daycare, for extra income.
Some couples also realize that they will have to pay more for childcare than the woman will be bringing home, in which case it does not make sense to hurry back to work – especially if it is just a job rather than a decent-paying position with good benefits in a career with good prospects.
It’s important not to overdo things when you have a newborn at home, but if you can’t or don’t wish to rush back to work at the end of three months, it is a relief to know you have a range of options.
Plan Paternity Leave
Make the most of it if paternity leave is available.
Check In Financially Every Three Months
Review your budget every three months, from the time you know you are expecting, right the way through the pregnancy to the end of baby’s first year. Make sure you are controlling spending and making the most of savings, and that your budget reflects any significant changes in income and expenses.
Check the Compulsory Education Provisions in Your State
Some states have compulsory education only for children age six and up. Everything else will need to be funded by you. This means either staying at home, or working at home or going back to work. Knowing what to expect can help you plan ahead. In some cases, you can start children at school as young as the age of three, for pre-kindergarten and kindergarten.
Factor in the cost of after-school programs if you won’t be able to pick up your child at 3 pm every day. You will usually have to pick up your child by 6 pm at the latest, which can be tricky if you are both working 9 to 5.
If not, you may have to get a larger car. If you are a “green” person, consider getting a hybrid.
Check how a new car will affect your monthly payments if you finance it, and the impact it will have on insurance premiums. Progressive has a handy website to get a quote and will list different options including their own, so you can be sure of getting the cheapest deal.
Since they also offer other kinds of insurance, such as renter’s or homeowner’s insurance, they will usually offer a discount for each additional policy you take out.
If one of you really needs a car for work and the other has to have a car to transport baby back and forth to appointments and so on, consider adding a second car to the household.
Check Your Insurance and FSA Provisions
Most people have to choose their benefits the November prior to each new calendar year. In some cases, you may be allowed to make changes to your choices based on what is called a “life-changing event” such as pregnancy and an addition to the family. Don’t be afraid to ask.
Get into the Habit of Keeping All Receipts
Some can be used for tax deductions. It will also help you keep track of what you are spending. And if you make a mistake, you can return items more easily to get a refund or store credit.
Check Your Credit Score
Most people do this in January every year, but it always pays to check. Remember, the better your credit score, the better rates you can get on mortgages, car finance and so on.
Check Your 401k, If You Have One
Be sure you are getting the most for your money.
If You Have No Maternity Coverage, sign Up for Disability Insurance
When buying the policy, be sure the pregnancy and any related complications are covered by the plan.
See if pregnancy is deemed a pre-existing condition if you change insurance carriers. In this case, you might not get coverage.
Check with Health Insurance in Relation to Any Pre-Approvals
Don’t assume they have the entire picture or that just because your doctor recommends something or has a particular hospital affiliation, that you will automatically be covered.
Check Your Ambulance Provision
Be sure you have an idea of how to get to the hospital when it is time. Some insurance policies don’t give full coverage for ambulance services (even though they might have been essential) and/or only waive the fee if you are admitted for a hospital stay.
Planning ahead will make things easier, allowing you to enjoy those first months and even years with your first baby without worrying constantly about money. Of course, the main thing you can control is your spending. Let’s look at smart shopping for baby in the next section.
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