It’s some of the best news you’ll ever receive: You’re expecting! A new baby will be joining your family. It’s such an exciting time preparing for the new arrival with cute outfits, baby gear, and nursery decorations. But before you start spending, take some time to plan ahead and think about how the little one will impact your budget.
- Consider your out-of-pocket hospital costs. If you are covered by your workplace insurance plan, schedule a meeting with your company representative to discuss what insurance will cover, and what it will not. Every insurance plan is different, and every birth is different. You may want a natural childbirth but could end up needing a caesarean section. It is wise to start saving money now so you are prepared in case of any emergency affecting mom or baby.
- Explore the impact of adding a dependent to your coverage plan. How much will it cost to add your child to your insurance? That is another conversation to have with your company representative. You may also want to get an idea of your co-pay expenses by asking your pediatrician how many planned visits are expected over your child’s first year. Don’t forget to factor in pharmacy costs for prescription medication as well.
- Recognize that childcare will likely be one of your biggest expenses. Daycare costs can run about $1,200 a month, depending on your location. The 2018 Care.com Cost of Care Survey breaks it down like this: an average of $211 per week for a daycare center, $195 for a family care center and $580 for a nanny. Even more startling, the survey revealed one in three families now spend 20% or more of their annual household income on childcare. The numbers seem daunting. It’s a good idea to do a comparison to see if the cost of working will offset the cost of childcare. One parent may want to stay home with the child once he or she arrives or reduce hours to part-time. How would that loss of income affect your budget? There are a couple of cost-savers when it comes to childcare. Some employers offer a dependent care account where you can make pretax contributions toward qualifying dependent care expenses. Plus, 20% to 35% of childcare expenses can be deducted, depending on your income. Choosing safe, reliable care for your infant while you’re away is an important decision, and many families will go to great lengths to pay for it.
- Doctors say breastfeeding is best, and it also costs less! Nurse your baby if you are able. It is good for baby, and parents.com says it could save you around $1,400 in your child’s first year alone.
- Don’t buy everything at once. You will be tempted by the infant carriers, swings, play mats and toys. Instead, think about what your baby will need in those first few weeks at home. Babies won’t need much more than diapers, a few clothes, a car seat to come home in and a bassinet or crib to sleep in at night. Hold off on larger purchases such as a high chair until baby is a little older.
- Shop smart and ask around. Before buying some of the large price-tag items, ask around to family and friends to see if they have anything you can borrow. Parents with older children may have a crib they’re looking to get rid of or things like a booster seat or baby sling. You can also visit garage sales or resale stores for these items. You may score a real bargain by finding a like-new item for much less than you’d buy in a big-box store. Just make sure to keep in mind warranties and recalls if you’re purchasing an item like a crib or car seat from a garage sale.
Planning, preparing and anticipating the arrival of your baby is a special experience. Enjoy it, and use these tips to make sure you’re really ready for the new family member. Next time, we’ll discuss ways to save once baby does arrive. Parents.com reports that you’ll likely spend $14,000 to $28,000 in your child’s first two years of life. There are simple steps to cut those expenses, so watch for part two next month!