I’m now only about a month away from the arrival of our first-born and while I feel as though my pregnancy as a whole has flown by, this last week or so seems to be moving at a glacial pace. Now I’m sure part of that is due to the fact that I’m actually moving slower as opposed to my usual hustle and bustle mode, but also because we’ve got our financial house in order and all other preparations completed, that it’s now just a waiting game. And while my husband and I eagerly anticipate our son’s arrival, planning as much as we can in advance around our finances will hopefully make the transition into parenthood that much easier.
Here are some financial must-do’s that we feel you should consider before your little one gets here:
Plan for time out of work
New parents are legally allowed to take up to 12 work weeks of unpaid, job protected leave thanks to the Department of Labor’s Family and Medical Leave Act (if you meet the requirements of course). Unfortunately not all expectant parents have the financial freedom to take this much unpaid time out of work. It’s important to understand your company’s policy in regards to vacation and sick time as well as any financial assistance your state may provide. For example, Rhode Island offers TDI (temporary disability insurance) to those who have paid into it while Massachusetts does not. Your HR department should be able to help you navigate through your eligible benefits but I’ve also found that speaking to co-workers who have gone through the process have been able to assist as well.
Be familiar with the ins and outs of your health insurance
Even with health insurance, having a baby is expensive. I have personally been to the doctors more times in past 9 months than I have in 9 years and I’ve thankfully had a healthy, normal pregnancy. When my husband and I got married we reviewed both of our employer healthcare plans and went jointly on the one that was the most suitable for our needs. I recommend reviewing the plan options available to you as early as you can to help forecast expected costs. The more familiar you are with your coverage, the easier it will be to budget for all of the related expenses that will surely follow. Once the baby arrives, just be sure to let your provider know that you’ll need to add them to the plan as well.
Understand your budget and fund your emergency reserves
To be honest, we should all do this whether you’re expecting a child or not. With that being said, it’s more important than ever when you do have a little one on the way. Understanding your current income and living expenses prior to having the baby can help you forecast both your pre and post baby budget. It will also give you an idea if you need to cut back in certain areas of your spending to allow for the baby related costs to be included such as diapers, food, childcare and even an increase in your utility bills if delivering through the winter and you need the heat to be left on all day. Cutting back on your living expenses in anticipation of the baby can help fund your emergency reserve bucket as well which can alleviate some stress in regards to unexpected healthcare costs that could come up and even provide more flexibility in the amount of time you can take off of work.
Life Insurance, Estate Planning and Education Funding are 3 other top priorities that need to be addressed while planning for parenthood. My colleague Chrissy Canapari has explained these in more detail in one of her previous blogs.
There are tons of resources out there which provide information on the cost of raising a child but quite frankly, I’ve decided to steer clear of them because I find them both daunting and overwhelming. We’ve decided to look at the expenses on a monthly basis as opposed to overall annual costs as it seems much more manageable, even if the outcome is the same. The key is plan for the things you know, try and give yourself a cushion for the things you don’t and enjoy the experience as much as you can. I have also found the advice from friends and family invaluable so just ask for help and guidance if needed. Apparently “it takes a village” so I’m welcoming it with open arms!
The information contained in this post is not intended as investment, tax or legal advice. StrategicPoint Investment Advisors assumes no responsibility for any action or inaction resulting from the contents herein. Megan’s opinions and comments expressed on this site are her own and may not accurately reflect those of the firm. Third party content does not reflect the view of the firm and is not reviewed for completeness or accuracy. It is provided for ease of reference.