Expecting a baby can be exciting, but budgeting for it may be less so. Here are some tips to plan your finances.
Get your finances in order
The best time to start thinking about your family finances is in the first trimester of pregnancy.
Write down your monthly baseline expenses
Making a list of your basic expenses will give you a clear picture of how you spend your money. You can use a personal finance program or app, but a simple spreadsheet will also work.
Review your loans, debt, and credit
In an ideal world, your baby would come into a debt-free family, but that is seldom the case. Regardless of your credit score or the amount of debt you have, there is a lot you can do. Talk to your bank and look into refinancing any loan you have. You may be able to reduce your monthly payments or even pay off smaller loans before the baby arrives.
Do an audit of your financial products
Take the time to analyze any automatic payments charged to your accounts, and reassess the services you are paying for (do you really need everything?). Once the baby arrives, it will be harder to do it.
Are you using all of your credit cards? If not, cancel them and only keep the one with the best interest rate.
Are you getting the best cashback or points deals, or are there better ones?
How are your savings doing? Are other banks offering higher interest rates?
Estimate future expenses and income
Costs
If this is your first baby or more than six or seven years have passed since your last child was born, then you should research what to buy and how much everything costs. You can use online cost calculators [1] or talk to friends who have recently become parents about their one-time and monthly expenses. You can also open a separate checking account for baby purchases to keep expenses under control.
Calculate future income
For many families, having a baby means living off a single income, at least for a while. If you currently have a job, make sure to talk to your employer about any vacation days you have saved up, the details of your maternity leave, and any benefits you might be unaware of.
If you and your partner are used to living on separate budgets, it’s time to create a new financial plan for your family and figure out your budget for the baby.
Prioritize saving
Everybody needs a nest egg, especially a new family. So try to deposit something into your savings account every month. Some financial advisors recommend saving 10 to 20% of your paycheck, but this can be tough, so try starting with 1 to 5%. That will help you establish the habit of saving and will have a huge impact on your finances in the long run.
