With a baby on the way, who has time for saving? There are medical bills, costs for outfitting the baby’s room, and expenses for diapers, clothing, and food that can leave you with little time, not to mention money to prepare financially for your little one’s arrival. If you are considering the financial ramifications of your baby and how best to prepare, here are some tips, both short and long-term, which can help you cope.
1. Plan for the future
Starting early is one of the best ways to prepare for the costs of having a baby. Sit down and outline what you believe your costs will be for food, clothing, medical costs, toys, furniture, etc. well in advance of your baby’s due date. While it will be impossible to predict exactly all the costs involved, having a general idea can point you in the right direction when it comes to saving.
2. Prepare liquidity
Hospitals don’t take IOUs from your retirement account and you can’t buy food and diapers with savings bonds. Similarly, you don’t want to have to take out a home equity loan or rack up huge sums on your credit cards just to pay for your baby because all your money is tied up in investments. It is therefore important to set cash aside in a savings or checking account to be prepared for the bills that are to come.
3. Dealing with debt
Part of preparing liquidity might involve paying off debt. You can’t be sure of what expenses you’ll incur when a baby arrives so it can be beneficial to be as free of debt as possible. While this doesn’t necessarily mean paying off your home or car, if you can free up credit cards and take care of other minor debts, you can leave yourself more breathing room in the event of unforeseen costs.
4. The role of friends and family
Talking to friends and family can be a great way to prepare financially for a new baby. Those with children can give you tips that are related to your local living situation such as stores and products with which you can save. Friends and family with kids are also great sources of hand-me-downs when it comes to clothes, toys, and furniture.
5. Don’t go overboard
It is easy to get caught up in the excitement of your baby’s arrival. During this time, it is important that you keep a level head and not overindulge in pricey baby items. Remember, your baby will only use the things you are buying for about 3-6 months, so the return on most of your investments will be poor. Try to shop in thrift stores, resale shops, and garage sales to find lightly used products that will save you money.
6. Cutting back
Once the initial wave of excitement of your new baby has swept over you, it’s time to get back to reality. Realizing your life has changed won’t be easy. You won’t be going out as much, you’ll be cooking more at home, renting movies, and generally becoming more of a homebird. It isn’t always an exciting lifestyle, but it’s great when it comes to managing and reducing your expenses.
7. Using and saving with generic products
It is common for new parents to snub generics who often associate a generic product with lesser quality and therefore miss the opportunity to save thinking the product detrimental to their baby. However, in many cases of food, formula, diapers, wipes, and similar products, a generic product is the same as a name brand, just cheaper.
8. Living arrangements
Just because you’re expecting, it doesn’t mean you need to upgrade your living space – at least not yet. A newborn will require so much time and care that it won’t be spending much time in its own room anyway for the first 6-12 months. Even after the first year, there are other options to moving. Convert a den into an extra bedroom or continuously downsize toys and clothing as your child outgrows them to save space and eliminate the cost of a large home.
9. Family insurance
Look at your respective employer sponsored health insurance plans to determine who has the best family rates available. You certainly don’t want to sacrifice quality for cost savings, but finding a plan which is both cost effective and suitable for your family situation can save you hundreds of dollars a month but still be prepared for the cost of delivering a baby.
10. Preparing for college early on
Although college for your little one is years away, it’s never too early to start saving. And counting on a full-ride sports or academic scholarship is not a financial plan. While things might be a bit tight for you right now, it’s never too early for grandparents and family members to help prepare. A great way to get a jumpstart on saving for college is to ask for government savings bonds or deposits to a savings account in your baby’s name for birthday and holiday gifts from family.
Author Bio: This guest post was written by Tom Becker who blogs for The Credit Letter for a credit card comparison website based in Australia who offer money-saving 0% balance transfer credit cards. When he’s not writing, Tom enjoys good food and the beach, preferably at the same time!
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Another thing that really helped us out was to beg, borrow, and steal from friends and family who had babies already. We barely had to buy anything in terms of playpens/swings, etc. Also, reward programs such as airmiles are great for getting baby gear.
Connie,
I completely agree with you. We got so much second hand stuff from family, friends, and co-workers that we didn’t need much. Our closets were full of clothes, and we got changing table, cribs, swings, almost everything we needed… even some unwanted food. We just had to provide milk and diapers
I guess times have changed. I paid for university on my own — now we get grandparents to start chipping in when they are a toddler?
At first I was scratching my head over the hospital bills thing; I thought the whole affair was covered under normal healthcare. But then I saw that the writer is from Australia, and I don’t know what they have to pay.
That being said, are there any pregnancy-related medical bills that aren’t covered by regular healthcare in Canada? My wife and I will probably need the info in the next year or so.
We’re kinda used to paying our medical bills with a hat tip and a “Thanks, Doc!”
Oh, and as far as preparing for baby’s arrival: I’d scour Freecycling.org myself.
Kevin,
While our healthcare system certainly covers the basics, there are some expenses where you would either need insurance or your own money. Two that we’ve dealt with so far have been upgrading to a private room at the hospital and paying for a prescription for him.
Of course these are small amounts compared to if we had to pay for the delivery and an overnight hospital stay!
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Don’t forget RESPs, with rising tuition rates, you’ll want to help your kids out as much as you can for school!
Are there any pregnancy-related medical bills that aren’t covered by regular healthcare in Canada? My wife and I will probably need the info in the next year or so.