Raising a child is a huge responsibility. You have to be ready to give up your life for the good of your family. If you are expecting a new baby, it will also be a major financial commitment to plan for. What are some financial issues to consider before your baby arrives?
A baby is going to stretch your budget for the first six months or so. You have to be ready to feed, clothe and shelter your child. Ask friends or family with young children if they have any clothes that their children no longer need.This means paying for baby formula and buying a crib. Diapers are also going to be a huge expense. Baby formula can cost up to $20 or more per can. If you are lacking for money, it may be a good idea to look into government assistance.
The WIC program will help you pay for baby food and programs such as DSS can cover a portion of your rent. This will allow you to pay your other bills such as student loans and clothes for yourself.
How Does This Impact Your Living Situation?
There is a strong possibility that you will need a larger living space to accommodate your new addition. Keeping the baby in your room for the first few weeks is certainly acceptable.
However, you want the baby to sleep in its own room after that. This means looking into a new apartment or perhaps a home. Your child is going to want a yard to play in. Pets are also tougher to keep in an apartment.
Anyone who is expecting a child should change their spending and saving habits immediately. It takes good credit and a significant down payment to get a loan. This may mean getting a second job to supplement your income.
Plan For the Future.
Now is the time to think about how you are going to pay for college. With costs rising significantly each year, it is important that you start saving right away. The 529 plan allows you to save money tax-free.
Ask your parents to buy a savings bond for your new baby. The bond should be close to maturity by the time your child is ready for college. Subsequent bonds can be purchased for each birthday, Christmas or other occasions.
It may be time to look at the rest of your investment portfolio as well. Stocks, bonds and mutual funds will usually have a return on investment of 10 percent a year. Talk to a financial adviser who can help you figure out how much you need to save and how to do it.
Buy Insurance Immediately.
Your child should have access to medical coverage provided by the state. You will have no such coverage. This means that you have to purchase insurance for yourself. Medical, life and renters or homeowners insurance should be on your shopping list.
Medical coverage helps you recover faster from an injury or illness. This is important because you cannot take care of your child if you are in the hospital. Working is also difficult when you are sick.
Life insurance helps your family survive financially if you were to pass away. Some policies may provide your child with money for college. In the short-term, it can help your surviving family members pay monthly bills such as a mortgage.
Renters or homeowners insurance will reimburse you for anything that is lost, damaged or stolen. You most likely don’t have the cash to replace clothes, a crib or anything else that the family needs to live comfortably.
Preparing for life with a child takes a lot of planning. You need to pay for food, clothes and shelter. This means looking into ways to invest your money to keep up with the rising costs of raising a child. Make sure that you purchase insurance. Your family needs to know that everything will be OK financially if you are gone or unable to work due to a disability.