Pictures of cute babies on social media attract many likes from married individuals, as well as singles. For women, there is the desire for a baby; even among those who already have children. So many women start longing for cute babies of their own. Here’s a reality check…have you considered how the arrival of a baby will affect your finances?
Like every other project you have run, it is wise to get a good understanding of how the addition to your family will take its toll on your finances. The earlier you begin to think about and plan towards this, the earlier you can work towards a secure future.
Below are a few time-trusted tips to help make your planning easier:
Reflect it on your budget
At this point, it is assumed you have a budget and you are doing a good job of sticking with your budget. With record keeping of all your expenses overtime, you have a good knowledge of what your income and expenses are pre-baby’s arrival. You can now do a little research to estimate the additional expenses that will follow the arrival of the baby, like:
• Delivery cost (this is one-off)
• Paediatrician’s visits
• Formula and other foods
• Toys and baby equipment
• Day-care (usually the highest expenses overtime)
Armed with this information you can start looking at some of your expenses that can be cut to accommodate these extra needs. Remember that raising a baby does not just involve monetary cost. It also requires time and personal efforts. The information from the re-done budget will also help you decide if one of the couple can afford to leave work and stay at home to take care of the baby.
Build an emergency fund
Recall the financial advice to have three to six months’ worth of savings, this becomes more important when you have an additional member of the family. If you are putting money away in a savings account, increase the amount you put aside before your child arrives. If you don’t have any savings, start building one now. A good way to start your savings is to authorize a standing order on your salary account into a savings account.
Get the right insurance
Check to ensure your health insurance plan covers maternity and baby-care. Make sure the baby is added to the plan within 30 days of birth. It is also a good practice to have a family life insurance plan that covers all members of your family, rather the breadwinner only. While doing this, do when to compare prices of the plans and the respective benefits in the policies.
Explore and exploit other employee benefits
If your employer offers any other employee benefits, other than the monthly salary, ensure you learn of this and benefit fully from them. This may require talking to the human resource department. Don’t make the mistake that since you have not heard about this in the past, there possibly is none.
Make a will
It is excusable if you don’t have a will this far. But with a baby coming now is the time to make one. Choose a guardian who is willing to care for your child and oversee his or her finances. Regularly check and update your beneficiaries on life insurance policies, retirement benefit plans and other accounts. Also, now is the best time to start saving for your child’s university education.
With the forgoing properly in place, it is now time to welcome that cute baby into your home and family.