Adding a baby to your family is one of the greatest joys in life, but it can also be very expensive. If you are considering expanding your family in the near future, it pays to put some effort into your financial planning. This can take away unnecessary stress and allow you to ease into your new lifestyle so you can focus on enjoying your new family member.
Here are five tips from Reid Hartsfield, Wealth Strategist at TD U.S. Wealth, that can help you get ready.
Understand Your Insurance and Paid Leave
A representative from your insurance company can help you understand exactly how much you will owe for labor and delivery costs. Contact them and get the information confirmed via email so there isn't a miscommunication. If you are married, review the insurance plans at your company and your spouse's company to see which one is more beneficial. If switching policies is best, find out when you are able to, so you don't miss that window. Connect with someone from human resources to learn about maternity or paternity leave options. By balancing benefits at each company, you can spend more time at home with your baby. And don't forget to update your insurance plan to include your child as soon as they are born.
Live like you already have a larger family
Test out your financial possibilities. For two-parent households, if one parent plans to stay home for an extended period of time, live like that now to see how well you manage. Put the extra money from your second income into savings and build up an emergency fund. If you will be using a nanny or daycare, ask friends and neighbors what options are available around you, visit those daycares and meet with the nannies so you can compare and contrast the benefits and costs of each. Add items into your budget like baby clothes that need updating every few months, such as diapers, wipes, formula, breastfeeding supplies, and even extra-curricular activities like pregnancy classes or mommy and me programs.
Get your finances in order
Before taking on the expenses of a new baby, review your budget including any debt. By getting organized and learning how to manage your money well, you can pass good habits on to your children. Make sure you and your spouse are on the same page with regard to spending and saving. If you aren't, sit down and compromise so you don't have to focus on finances when you are busy with your family. Read books on budgeting. There are many different strategies and finding the one that's right for you is important.
Start thinking about how to save for college
Now is a great time to start thinking about saving for college. There are a variety of college savings options that you can research and discuss with your tax advisor, accountant, financial planner or investment advisor. Do research ahead of time, so you don't have to focus on expanding your financial education once your child is here. Decide now if you can contribute a small amount each month so it builds over time.
The cost of baby items can vary greatly. Do you need high-end clothes when, early on, they only last three to six months? Check if relatives with young children have hand-me-down items such as clothes, toys, or even a rocking chair. Walk around the store to get an idea of the cost of breast pumps, bottles, swaddle blankets, and other necessary items. Make a registry to avoid getting duplicate items. Request gift cards so you can pick up what you need or shop months later after the initial support has decreased. Instead of receiving bonds, ask for a gift of stock which can appreciate more as your child grows and can teach your child about investing.
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The information provided here is for general informational purposes only and should not be considered an individualized financial plan or personalized financial planning advice. The financial planning tips mentioned here may not be suitable for everyone. You must consider a financial plan for your own particular situation before making any decisions.
All expressions of opinion are subject to change without notice in reaction to shifting market conditions. Data contained herein from third-party providers is obtained from what are considered reliable sources. However, its accuracy, completeness or reliability cannot be guaranteed.
Examples provided are for illustrative purposes only.
This information is not intended to be a substitute for specific individualized tax, legal or financial planning advice. Where specific advice is necessary or appropriate, TD Bank, N.A. and its affiliates recommend consultation with a qualified tax advisor, CPA, financial planner or investment manager.