Firstly, congratulations on your new baby. This is a truly happy time in any person’s life, but you need to understand that preparations are more than just buying cute clothing and arranging a baby’s room. Your little bundle of joy comes with a large list of financial responsibilities you need to be prepared for.
Planning ahead is absolutely crucial before you have your child. Considering your savings, your insurance plans, and your budgeting strategies are all just a part of a list of factors you should bear in mind. The easiest and more efficient way to start off on the right foot with your newborn is to create a financial checklist.
This week, we hope to guide you to preparing a financial outline that will make preparing for your new child easier. What follows are specific considerations you need to look at to ensure you are ready to properly take care of your newborn.
First Things First, Your Income
You need to have a stable and secure job that will do more than just pay your bills. There are some basic factors of your job you should examine when preparing for a child. Firstly, you need to make sure you will be at your current job for some time as changing careers while a child is on the way is not a smart move. If you are in the middle of a job change, make sure you get it settled before your new baby arrives so you are at least positioned in a new company or role.
Try and avoid jobs with inconsistent paychecks. Commission and freelance work are not recommended compared to the steady and reliable pay a salaried job can provide. If you are confident with dealing with a commission based job then go for it, but typically people often feel more relaxed about money when it is predictable.
The Perfect Time to Purchase Life Insurance
If you don’t already have a life insurance plan you need to start considering one before your child arrives. Also, if you just purchased a new home or in the early years of homeownership, you should consider a term life insurance plan.
Look for a term that will cover you for the length of your mortgage, typically 20 or 30-year periods. This is because you’ll want to ensure that your young family won’t be stuck with the mortgage should something happen to you.
Once your son or daughter is born, having a term plan taken out on him or her should be your next move. We recommend a term 20 plan as it will cover your child up until they are self-sufficient and just leaving university. This is important as it will ensure your child’s future insurability. By locking your child into an affordable term plan at a young age, you won’t have to worry about trying to get them coverage if they should get seriously ill as they are growing up.
Your final insurance need will be a disability and critical illness plan. During your working life, you are likely to be injured at some point no matter what line of work you are in. These plans will cover your income should you be unable to work so you can focus on getting healthy again. With a new child and a rise in monthly living expenses, these plans can be incredibly invaluable.
Create A Specialized Baby Fund and Budgeting
Budget like you’ve never budgeted before because you need to be ready to face the unknowns that having a child can bring. Try creating a spreadsheet with Excel or any number of free programs and include all of your expenses so you can track them. You should be considering your mortgage/rent; car payments; travel costs; maintenance costs for your living space; groceries; and your recreational activities and date night outings.
With this planned out, you can see what is costing you the most each month and make cutbacks where they are needed. This, in turn, will help you start a new baby fund. You should begin to set money aside for essential gear, furniture, and supplies.
You’re going to want to get better quality car seats and cribs to ensure your child’s safety, but with a higher quality comes higher prices. Car seats and cribs can cast anywhere from $100 to several thousand, making the need for proper budgeting all the more important.
Is your car truly child-friendly? A two door sports car or jeep is going to make getting your baby in and out of the vehicle far more difficult. If you are considering buying a new car, look for one with a larger back seat area to allow for your child’s car seat.
Make sure the car is within your budget and that it tests higher for overall safety. If your car is already practical for a newborn, make sure you get it inspected and take care of any issues you may have with it. Check with your local dealership or mechanic and see if the repairs aren’t too costly. In the end, it may even just be more realistic to purchase a new car instead of spending a large amount on maintenance.