Starting a family is an exciting adventure but also comes with responsibility. Here are 8 ways to get your finances in order before having a baby.
Are you thinking about having a baby? Then you’re probably also thinking about getting financially prepared.
Starting a family is exciting, but there are many responsibilities involved, including financial responsibilities. You’ll have a much easier and more stress-free time with your baby if you get your financial life in order before you get started.
Feeling like getting your finances in order is too difficult? We promise that anyone can do it — you just need the right tips to follow. In this guide, we’ll show you some simple steps to help you get your financial life together. Keep reading to learn more about what to do before having a baby.
At the start of the first trimester, it’s a good idea to start reducing your credit card debt, so you’ll have fewer bills when the baby arrives.
If your credit card balances are thousands of dollars high, you’re paying hundreds of dollars in interest alone. You’re going to need that money to take care of your baby’s expenses, so it’s time to cut down.
Having this credit card debt will also get in the way of qualifying for big financial steps, like buying a home or a car.
If you can, try to transfer your existing balance to a card that has a lower interest rate. Charge the card as little as you can until the debt is paid off.
This month is also when you should start making a budget. Save all your receipts to figure out exactly what’s happening with your spending. Keep your receipts for a few months — then, when you add them up, you’ll get a realistic picture of your spending habits.
Now, you should choose and install the right financial software to help you stay on track. These personal finance tools are inexpensive and can really help you keep your budget on track before having a baby.
Personal finance software includes forms you can use to make your budget, and charts that can help you track your financial flow. You won’t have the numbers to enter yet, but you can start getting familiar with the program.
Once the baby arrives, you’ll be glad you know the software, because it will make financial planning so much faster and easier.
Now is a good time to check your credit report and correct any mistakes you find. Even if you always pay bills on time, mistakes can still happen. But you’ll need a clean credit record if you want to take out a loan for a house or a car later.
This is also the month when you need to crunch the numbers using the receipts and financial information you’ve been saving. Use the budget sheet in your software program and enter the information so you can make an accurate, easy-to-follow budget.
Now, take a look at your current budget, and start finding places to save money. Keep in mind that you’ll have a lot more expenses once the baby arrives, and you’ll need to find room in the budget.
If you’re planning to cut back your work hours or take a leave from work to care for the baby, you’ll also need to factor in your lowered income to your new budget. If you’re having a hard time figuring out how you’ll save enough money for the baby, it’s a good idea to work with a financial planner.
This month is the time to check with your job’s HR department about any paternity or maternity benefits offered. Figuring out exactly when you’ll need to give your notice and how much leave you’re allowed to take.
During this month, you also need to start following the new budget you created. You’ll still have some wiggle room since the baby isn’t here yet, but you need to follow the budget and save whatever’s left over. Trust us — you’ll need it soon.
Sit down with your spouse and have a realistic, honest talk about your plans for after having a baby. Will you be staying home for the foreseeable future, or going back to work? How will you manage childcare expenses if you need them, like daycare?
If you really love your job, or it offers great benefits, you’ll probably have a solid case for staying. If staying at home appeals to you more, you’ll need to make sure you plan ahead for the financial loss.
This is also the right time to look closely at your options for childcare, like nannies and daycare. Check references and meet with them in person to help you make the right choice.
During this month, take some time to think about the distant future. Take out a life insurance policy, such as one from Vitality Life. This will help ensure that your child is taken care of, no matter what happens.
You’ll also need to write a will. This will determine who will care for your child if something happens to both parents, as well as where your assets will go. It’s easier to get this work done before the baby arrives than after.
Now, you can look into more exciting future plans: setting up a college fund for your child.
There are a number of different options for saving up for college, so shop around and find what’s best for you.
During this month, you’re probably thinking of shopping for supplies for the baby. However, it’s a good idea to wait until after the baby shower, so you don’t buy things that you’re already getting gifted.
Consider opening a safe box at your bank, in case some people send savings bonds as a baby shower gift. This also offers you a safe place to keep the birth certificate.
It’s a good idea to start planning for retirement at this stage, too. Even though you’re budgeting for the baby, keep budgeting for retirement throughout this time.
Are You Prepared for Having a Baby?
Having a baby is such an exciting time in your life, however, it also requires a great deal of financial planning. If you follow these steps through every trimester, you’ll be all set for having a baby by the time the ninth month arrives.
Looking for more tips to help you prepare? Check out our pre-baby planning guide here.