We’re expecting! How do we plan our finances?
Along with all the excitement that comes with a pregnancy announcement is the sometimes-unspoken worry about how to afford all that goes along with a tiny bundle of joy such as food, clothing, childcare and activities.
Even future expenses like college tuition and weddings that seem so distant now will be here before you know it. But by taking a practical look at what life will look like postpartum, you and your family can thrive financially.
Plan for life after delivery
Do either you or your partner plan to stop working to stay home with the baby? If so, how would that impact your current financial situation? Alternatively, if both of you will continue to work full-time you should start investigating the cost of child care in your area.
“Many families are shocked at the cost of child care in their community,” explains Beth Blanco, Certified Financial Counselor with Everyday Money, Foresters Financials’ live financial coaching service. “Some couples find that one parent foregoing their career temporarily or cutting back to part time may allow them to stretch their finances further than paying for full-time daycare.”
Rework your budget
Depending on your career and childcare decisions, you should begin to practice living within that new financial reality now. For instance, if you know childcare will cost you $1,500 per month, rework your finances and start setting aside that $1,500 well before the baby arrives.
Not only will this strategy put you into reality mode early, but as a bonus you’ll also have a nice healthy nest egg for unexpected expenses – or maybe even the start of a college fund!
It’s important to create a new balanced budget that is based on your new lifestyle, which may mean cutting out discretionary expenses that have crept into your life such as travel, meals out, lavish clothing or entertainment.
Practice “values based” budgeting, which means spending your income in the areas that hold the most value for you.
Pre-purchase obvious expenses
You can see some expenses coming well in advance such as a crib, a stroller, a layette, or even a replacement vehicle that’s more family friendly. You’ll want to try to arrange for all these needs well before the baby arrives. You may be able to get some of these items gifted to you, so make sure your register at a baby store early in the pregnancy to stretch your dollars.
Items you don’t receive as gifts may be available second-hand if you’re on a tight budget. Check into baby swaps or second-hand stores that specialize in infants and babies. You’ll be surprised how many items are actually brand new!
While it can be thrilling awaiting the arrival of a baby, you can put that time to good use by planning for the financial impact well ahead of time. By doing so, you can truly enjoy your new baby knowing that you are prepared and financially secure going forward.
4179434H CAN/US 02/20