How to Be Financially Prepared for Your First Child

Ask any parent. They’ll tell you how raising a kid is their biggest lesson in time management and cultivation of patience.

What they won’t tell you, however, is that pregnancy, delivery, and then raising the kid can break your bank. It sounds creepy to link the beautiful experience of being a parent with financial burden. Who said truth is sweet!

No reasons for despair though, because you can take control of the expenses with careful financial management and timely planning.

From buying your strollers to enrolling them in swimming classes, this guide will help you prepare for the financial demands that having your first kid can impose on you.

Create a Baby Fund

This tip is for parents who are planning to have a baby in the next few years. It’s about estimating the one time costs of all the new ‘things’ you’ll need for your baby. This doesn’t include the medical expenses during pregnancy and child birth,along with post-birthing care. You can easily find the costs of things like baby stroller, diaper bags, nursing top, maternity clothes, baby furniture, basic toys, baby monitor, safety gates, etc. Also, look for expenses related to any alternations you’ll need in your house (installation of safety railings, repairs for naked wires, etc.). Once you arrive at the amount, start saving for the fund when you find yourself expecting the baby. Even unnoticeable cost cuttings will help you complete this fund. Also, this helps you realize if you’re overspending on things that are probably not needed anytime soon.

Managing Expenses of Pregnancy

The biggest surprise for couples is when they get the first look at the real hospital bills as they prepare to check out from the medical institution. Medical insurance does not cover all components of medical costs associated with pregnancy and child birth. Your out of pocket expenses, including co-pay and deductibles, could be anything between £500 and £3000. Be smart, and stay on top of the hospital billing components, every day. Ask around to understand the expense components that medical insurance does not cover. Look for specific maternity riders that you can purchase on top of your insurance for maximum coverage. Also check whether your employer offers any specific benefits for taking care of maternal medical care and child care. If you’re going to purchase a new insurance policy, check that your preferred hospital is covered in its network of cashless payment facilities.

Account for Immediate Increase in Monthly Expenses

Good money managers know their family’s average monthly expenses. However, only the best money managers remember to account for the increase in monthly costs once the baby comes home. Some of the repetitive expense heads are:

• Ordering food because both parents are too busy taking care of the baby

• Nappies and formula for the baby, week after week

• Visits to the pediatrician

• Toys and books

You could easily be staring at a 20% straight jump in monthly expenses once you your baby arrives at your home. It’s better to be prepared than to be shocked when reality hits you.

Get Freebies

New parents don’t realize this, but they can benefit a lot from freebies offered by consumer brands and consumer research organizations, particularly related to the needs of your newborn. From diaper reward programs (accumulate points as you buy diapers from a specific brand and redeem them for products from the same brand) to brands that send you free samples of products such as personal care for mothers, baby wipes, and baby grooming products – you can literally get a lot of freebies, only if you’d look hard enough for offers. Thankfully, you don’t need to spend your time, because it’s easy enough to bookmark some amazing sources where you will find all these offers carefully compiled for you. Baby health formula, bibs, toddler clothing, and baby care products of all kinds – these can take a toll on your financial planning. Instead, let ‘freebies’ free up your mind.

Don’t Overspend

It’s too tempting to spend on stuff you don’t need when your first baby makes its way into your world. High end photo shoots, customized baby furniture and customized baby dresses – by all means go for them, but only if you can afford many such expenses without being worried about your next paycheck being too far. Because babies outgrow all their stuff so quickly, you can always opt for second hand purchases, particularly for expensive buys such as baby strollers. You’ll invariably be able to find something so gently used that the product will look and work like absolutely new.

Concluding Remarks

Having your baby is a milestone moment in your life. With proper financial planning for the same, you can make it all the more fulfilling and enjoyable, not only for yourself, but also for the baby.