Nine Months to Financially Prepare for a Baby

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Congratulations—you’re going to have a baby. A lot of excitement comes when that pregnancy test reads positive. Doctor appointments, baby showers, and learning the baby’s sex are top of mind for most expectant parents.

But what about the financial consequences of having a baby? Sound financial planning is more critical than picking colors for the nursery. The expense of a baby can blow the budget. How should you prepare financially in the nine months leading up to the big day?

Pay Down Credit Card Debt

Check your credit score when you find out you’re pregnant. Are you financially sound? It’s time to clean your financial house.

Use the first trimester to pay down credit card debt. Heavy credit card debt could interfere with your family’s growth. The average debt millennials carry is $36,000, with 36 percent of their monthly income going to pay down this debt. If you don’t manage your debt, you won’t be able to obtain that loan for a bigger house or new SUV.

Research Daycare Pricing

In 2023, the average U.S. daycare costs $321 per week for an infant. That’s up from 2022’s $284. A nanny was $766 weekly in 2023. It went down slightly for a toddler. The average 2023 daycare cost for a toddler was $293 weekly.

Depending on where you live, it could cost more or less. For example, infant childcare in Washington, D.C., costs $419 monthly. In contrast, California comes in at $304 for an infant.

It’s important to research your area during the first trimester or when you first make arrangements for adoption. Once you find a daycare that meets your budget and care requirements, ask about reserving a spot. Many daycares have waiting lists. You don’t want to be scrambling for childcare at the last minute.

If you’re staying home with your baby, remember your time is worth money. There’s a significant income adjustment when one parent stays home. You’re still paying indirectly for childcare.

Health and Life Insurance for Baby

Prepare for your health insurance premium to increase. Whoever is insuring the family should immediately discuss it with the HR director or manager. You need to know what you’re paying to budget.

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Find out the window after the baby is born, you have to add her to your insurance policy. If you don’t add your baby during this period, your baby won’t have health insurance until the next open enrollment period. That means you’ll be paying all the doctor’s fees.

Ask if your baby will have life insurance with your company. It’s a morbid discussion among all the joy, but you must have it.

Disability and Life Insurance for Parents

You’re providing for one more person. If you become incapacitated and can’t work, who’s going to help pay for your child?

If your job doesn’t offer disability, go to an outside source. But disability insurance is a must.

That also goes for life insurance. If you die before your child is an adult, expenses still must be paid to care for them. Don’t leave your spouse alone to shoulder this.

Establish a Working Baby Budget

Once you’ve gone through and crunched the numbers, it’s time to form a budget. You need to factor in everything previously discussed. You also must consider prenatal and baby care co-pays. And since you'll be on maternity leave for a few weeks. There will be lost income that must be factored in the budget.

Another element that must be added to the budget is the day-to-day costs of caring for your baby. The average U.S. parent goes through 3,000 diapers yearly. The average box of 44 diapers will run around $30. Babies eat and grow; you'll have to buy food and clothes for your child, and that adds up.

Besides this, you'll also have to factor in your usual expenses in the budget.

Resist the Good Life Before Baby Comes

Many parents-to-be want to have fun before the baby comes. They enjoy dinners out or go on big vacations. They’re enjoying one last hurrah!

But resist the urge to go overboard. This is the time to save money, not spend it.

Watch Spending on Baby Gear

Don’t go overboard on the baby gear. Yes, you should purchase a new, quality car seat, but you don’t need a $1,000 crib. It’s not glamorous, but buying a crib for less than $200 from Walmart will still give the baby a good night’s sleep.

Instead of asking for the newest baby gadgets you'll find, eventually, you won’t use, ask for practical gifts like bottles and a stroller.

Better yet, ask for gift cards, and you can buy what you really need.

There are numerous baby consignment shops where you can find second-hand gear. This is where you buy the highchair and bassinet. Clothes are a good deal at these stores too. Don’t buy a second-hand car seat. There’s a safety concern.

Borrow Maternity and Baby Clothes

You want to look good while pregnant, but that doesn’t mean breaking the bank. Ask your friends who have had babies if they still have maternity clothes.

Take advantage of hand-me-downs for your baby’s clothes. It seems like a little thing, but it could turn into big savings. Babies grow fast.

Open a Safe Deposit Box

Your baby may receive savings bonds. You'll need to keep them safe until they’re ready to use them. Opening a safe deposit box is a great place to keep them.

The other alternative is a fireproof lock box or safe.

Work on Saving for Rainy Day

It’s hard to save when you have a baby, but still, try to put a little away each month. You can especially do this in the nine months before your baby comes.

Develop Estate Plan and Designate Beneficiaries

It may seem premature but do some estate planning. How will your baby be taken care of if you die? Also, add your child as a beneficiary on your 401(k) plan or other retirement accounts. You probably have your spouse on them now, but the child should be the second beneficiary.

Remember to set up the paperwork designating a guardian for your child. Who will raise your child if something happens to you and your spouse?

Set Up a College Savings Plan

Start thinking about it, or go ahead and set up a college savings plan. They may not have been born yet, but time goes by quickly. In 18 years, your baby will, likely, be going off to college. You must be prepared.

Plan Financially for a Baby

Research what expenses you’ll have. Don’t’ go overboard with buying baby gear. Sit down with your spouse regularly and go over the baby budget.

It can be scary having a baby, and there’s a lot of work ahead. Take some pressure off yourself once the baby comes by planning your finances.

The Epoch Times copyright © 2024. The views and opinions expressed are those of the authors. They are meant for general informational purposes only and should not be construed or interpreted as a recommendation or solicitation. The Epoch Times does not provide investment, tax, legal, financial planning, estate planning, or any other personal finance advice. The Epoch Times holds no liability for the accuracy or timeliness of the information provided.