When you plan to extend your family by having a baby, substantial financial considerations are to make. It isn’t just about going for routine medical check-ups, looking at ultrasound images, buying baby clothes and other short-term plans. The cost of raising a family is so much more.

Initially, you need to plan for the baby’s expenses, such as diapers, formula, prenatal care and other essentials, which can all add up. Your budget needs to shift to accommodate these additional expenses.

How to Prepare For a Growing Family?

1. Purchase Life Insurance

As new parents, you need to put certain safeguards for your baby. You could purchase life insurance to secure your child’s future if something happens to you. If you cannot afford whole life insurance, then term insurance can be a way to get started and put something in place. It would be ideal for both partners to purchase life insurance to cover the other’s needs in an unfortunate incident. The idea is to create a financial cushion to protect your loved ones’ future regardless of what curveballs life throws at you. If you already have life insurance, you could consider upgrading it to meet your current requirements.

2. Check Your Health Insurance Coverage

One of the most significant one-time expenses of having a baby involves the cost of delivery. It can be costly if you pay for this out of your pocket. It would be better to check if your health insurance policy covers the expense. If not, consider buying one. Always cross-verify the terms so that it meets your requirements. Speak to a professional to get the right advice on what policy you should get. In general, some of the questions to ask your insurance provider are:

• What is the coverage for prenatal visits and other services? • What is covered under my policy for prenatal care? • What is my deductible? How is my deductible applied? • Does my plan cover a hospital stay? • Does my policy cover additional providers at the hospital? • Does my policy cover home birth and midwife services? • How do I add my baby to my health insurance plan? • Does the policy cover mental health services? These questions will ensure that you are financially prepared for all pre-delivery and post-delivery medical expenses, which can get heavy on the pocket.

3. Plan Your Maternity and Paternity Leaves

Maternity and paternity leave planning is an essential aspect of financial planning for your growing family. It would help if you considered whether you would be paid during your time off. It can significantly impact your household expenses before and after you have the baby. Have a clear conversation with your employer to understand the company’s policies to estimate how this period will affect your bottom line. While the policy varies from one company to another, based on The Family and Medical Leave Act stipulates that if you have worked for at least 1,250 hours or 12 months for an employer, you are eligible for paid time off for family commitments such as having a baby. If your company is not covered under the Act, you may have to explore other options. That can include taking account of your sick days, vacation days and other sanctioned leaves to make the most of your leave policy.

4. Clear Your Debt

It’s also necessary that you clear any large outstanding debt you have so that you can focus on your baby’s needs when they arrive in the world. That can improve your disposable income to care for your baby. However, that doesn’t mean that you drain most of your savings. You should still have enough money to tackle an emergency if it arises. Also, it doesn’t make sense to refinance your debt by taking on another loan. For instance, don’t use your credit card to pay utility bills. That will only add to your expenses in the long run. Ensure you pay at least the minimum balance due on your debts so that your credit score isn’t affected.

5. Budget For Your Baby

After you have covered your insurance plans, sorted your maternity and paternity leaves, and planned to pay off your debt, the next step is to budget for your baby’s arrival. Make a list of all the things you will require for your baby on a daily basis and estimate the costs. Don’t forget to account for medical expenses or any other emergencies that may crop up. It is also important to have an emergency fund to have some buffer for any unexpected expenses that may arise before or after your baby arrives. While budgeting for your baby’s needs, make sure that you provide for your own financial requirements and emergencies. Identify unnecessary spending avenues and cut them out to optimize your budget.

6. Sort Out Your Nominations and Other Investments

Once you have had your baby and taken care of budgeting for their needs, you must start thinking about their future. Begin by updating beneficiaries and nominations in your assets to include your child. This will ensure that your baby has a rightful claim over your assets in case of your demise. Also, update your will and give power of attorney to a designated family member to provide for your child’s needs. You could also get a headstart on planning your child’s education requirements and wedding needs by saving for it right from the start. You could open a separate savings account for your baby to set aside money for baby essentials and save for their future.

Takeaway

Having a baby is one of the most miraculous aspects of life. While it is easy to get consumed in taking care of your own health, navigating a pregnancy life and readjusting to new priorities, it is also important to pay attention to your finances. Review your financial health, create a budget and get ready to smash the parenting life.