Babies are an expensive prospect: in the US, the average cost of delivery alone is upwards of $10,000, although much of that is covered if you have health insurance. Though the costs associated with having and raising a child are enormous, there are a number of ways you can save and reduce expenses to make the decision a financially solvent one. The bottom line is, regardless of your financial situation, planning for the future will help you avoid adulthood burnout as you celebrate bringing new life into the world.
Before You’re Expecting
If you know you plan on one day having children it’s a worthwhile idea to start setting aside money in a savings account. You can use a traditional savings account or find a fixed deposit account to accrue higher interest on your savings. Expecting parents often use fixed deposit accounts because the money is deposited for a stated period of time with a fixed interest rate, meaning that you can cash in on your savings once the baby arrives. It is also important to review your health insurance policy to make sure you are covered for the costs of delivery and aftercare.
When You’re Expecting
If you’re expecting, financial considerations will likely play a factor in how you prepare for the arrival of a baby. You can set up a college savings account for your child, either in a traditional savings account at your bank or a 529 account. The money in a 529 plan may be used to pay for the college expenses and K-12 tuition of the beneficiary, tax-free. Finally, you may need to think about life insurance if you don’t own it already in order to ensure your children are financially solvent if something happens to your or your partner.
After You’re Expecting
If you’re a new parent: congratulations! There’s no need to panic about not saving for your newborn right away. The best thing you can do is to start setting aside money and look for ways to save on baby costs, many of which can be reduced drastically by careful planning. As with any financial decision, it’s crucial to ask yourself: does my baby need this? There will be times you might feel pressured to buy pricey add-ons your baby doesn’t need. Always research items carefully before you make a purchase decision.
Financial planning is only one part of a joyous, occasionally stressful new phase in expecting a baby. Though it’s an important consideration, don’t let it overtake your life: trust that things will work out and do your best to plan along the way.1