Pictures of cute babies on social media attract many likes from married individuals, as well as singles. It is fun to long for your own cute babies, but there’s something less fun. Have you considered how a baby will affect your finances?
Like every other project you can think of, it is wise to get a good understanding of how the addition of a family member will affect your financial situation, so you can start now to plan for a secure future.
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 it. With record keeping of all your expenses overtime, you have a good knowledge of what your income and expenses are, pre-baby. 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 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 your spouse 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 in 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
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 than the breadwinner alone.
Explore and exploit other employee benefits
If your employer offers any other employee benefits, other than the monthly salary, explore them and benefit fully from them. This may require talking to the human resource department. Don’t make the mistake of thinking 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.