So, you’re going to be a parent?!? Congratulations! Preparing for a baby is one of the most exciting times in life. There is nothing like seeing your newborn child and holding it in your arms for the first time. It’s a feeling of complete and total love, something that’s simply too hard to explain. You’ll understand what I mean when the time comes.
Of course, once the reality of the new baby sets it, you might feel a sense of utter and complete panic. After we had our first child, I remember wondering how I was allowed to leave the hospital with her. At that point, I wasn’t even thinking about how I was going to teach her how to read, write, and become a good person. I was scared to death that I wouldn’t be able to keep this kid alive!
I didn’t have a clue what I was doing, but lo and behold it all worked out. It turns out, all she needed was love and affection…plus the occasional diaper change and 3 A.M. nightly feedings. I’m proud to report that both of my little girls have made it past their infant years, and I’m very proud of the young ladies they are becoming.
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Financially Preparing for a Baby
Yes, a new baby is going to change your life in countless ways. Life is not all about you anymore. Everything you do affects them, and that goes for your financial decisions too. When preparing for baby, there are a number of money moves you can make to help get them started on the right financial foot from saving to easy ways to make extra money. Here’s our new parents’ guide to financially preparing for a baby.
Get on a Budget
One of the best things you can do for your new baby is to whip your own finances into shape. Kids learn how to handle money from their parents, and you can point them in the right direction by showing them how you budget. Besides that, children aren’t cheap. You’re going to need to save money where you can, and keeping a monthly budget helps you take control of your money. Here as some great tips on ways to make an extra $500 a month to help with your savings goals!
Pay Off Your Debt
If you’re like most Americans, you’ve probably got a little bit of debt lying around. Maybe you’ve got some credit card debt, some student loans, or perhaps you’ve already financed some new baby furniture (Please don’t do that!). Pay those suckers off as fast as possible – preferably before your new baby is born. Getting out of debt helps create wiggle room in your budget. Refinance it if you need to, but don’t take out any more. When you have fewer bills to pay, you can live life on your own terms. So, get that debt paid off ASAP!
Buy Health Insurance
Having health insurance is now the law of the land, so avoid the fine and get yourself covered. Even more importantly, your health insurance can help take care of the enormous hospital bills you’re going to have from the birth. Hopefully, there won’t be an complications, but the financial ramifications could ruin your financial situation for years. Additionally, you’ll want to make sure you have at least enough money saved up to meet your deductible. So, bust out your new budget and get to saving!
Purchase Term Life Insurance
When you’re young and single, it’s easy to put off getting life insurance. We all think we’re invincible, but as a former funeral director, let me tell you that s#it happens – and, unfortunately, it happens more than you’d think. Now that you’ve got a little human depending on you, it’s time to protect them. Look for a good term life insurance policy that will cover your funeral expenses and give your family money to live on. Term life insurance is a cheap way to protect your family from the loss of your income due to your death. We’re talking like $25 a month for $250,000 in coverage on a healthy 25-year-old male. Use the widget below to compare policies from a number of different companies. Seriously, just do it.
Get Yo’Self a Will
Now that you’ve snagged a good life insurance policy, it’s time to create a will. I want to be completely transparent with you here: Getting a will is something I put off for far too long. I mean, if I died, the last thing in the world I would want is the state deciding who gets my kids. Plus, I want to be clear about how my assets should be divided if I die (and how those assets should be used to help my children). The thing is, creating a will is pretty easy. You can even do it online. Personally, I used LegalZoom to make a will for both Holly and myself. Last wills start at about $69 apiece, and LegalZoom makes the entire process super simple. Just fill in the questionnaire, and you’ll be done in about 15 minutes. You can have your new will shipped to you in just a few days. Learn more by clicking on our affiliate link here.
Start a College Fund
Forget about elementary school! The minute your baby is born, it’s time to start thinking about college. Student loan debt is on the rise, and a big part of that is the failure to prepare financially. So, the earlier you start a college fund, the more time you’ll have for that money to grow. Since our home state provides great tax benefits, we use a 529 Plan. However, you can also use an Educational Savings Account (ESA), UGMA and UGTA accounts, or even a Roth IRA. Check out your options and get saving right away.
Invest for Retirement
Before you even think about investing in a college fund, you need to make sure that you’re funding your own retirement. There are plenty of ways for your children to fund a college education, but good luck finding somebody else to fund your retirement. That’s why it is über important that you pay yourself first. At the very least, you need to take advantage of any company match offered by your employer. (That’s free money, y’all!) If budget constraints force you to make a choice, always choose retirement over college.
Don’t Overspend on the Baby Products
When preparing for baby, it’s easy to get so excited that you end up overspending. Trust me, I know how tempting it can be to buy every single outfit in the store. I mean, those infant shoes are absolutely adorable. But, the thing is, your brand new bundle of joy really doesn’t need a Bellini Baby crib. Something cheaper, or even second hand, will do just fine. Try shopping Craigslist, Facebook swaps, and garage sales for baby clothes and furniture. You can even check out amazon and ebates for special offers. Your little one will grow so fast, it isn’t worth spending a fortune on their wardrobe or their bedroom furniture. Why spend $20 on a shirt when you can get it very lightly used for $1? Need more suggestions? Check out our post to learn how to save more money.
Preparing for Baby: Lead by Example
Becoming a parent is an absolutely awesome experience – one that you’ll never forget! It’s an incredible responsibility. Your child will depend on you for all of their needs, and they will learn through your example. By using these tips, financially preparing for baby should be a breeze. Get ahead of the game, and start teaching your child good money habits from Day 1. Good luck, and congratulations!