01 Jun How Financial Planning Helps Prepare You for Parenthood
Bringing a baby into the world is among the most life-altering processes you can experience. Though you’ll learn of a capacity to love that you never knew possible, the reality of costs can take its toll. As having a financial plan can improve your physical and emotional health, as well as your overall happiness, it can also help you enjoy the experience of welcoming a baby. Here are some things you can do to minimize stress and prepare for your new family member.
Look at Childcare Costs
It’s estimated to cost about $245,000 to raise a child from age 0 to 18. That’s quite a sum, but it shouldn’t scare you away from having children. Most families adjust just fine, though it does require you to make some changes to your everyday life. The important thing is that you look into the costs of having a child so you’re prepared and can make room in your budget. Assessing your current financials, estimating your future income and expenses, cutting costs, and breaking in your new budget will help you adjust to the costs of parenthood. Don’t wait until you feel completely ready or you may never experience the joys having a child.
Start an Emergency Savings Fund
One extremely important way to boost your overall well-being and give yourself peace of mind when becoming a parent is to start an emergency fund. If you already have an emergency fund for you and your spouse, then you’ll want to increase it. This fund can help keep you above water when met with unforeseen medical bills, job loss, or any other surprises life may bring. Most emergency funds are kept in a savings account or money market, but some prefer to keep a cash envelope in the home. Whatever your approach, it’s important to have the money instantly available if and when you need it. Once you start the emergency fund, there are a number of ways you can build it throughout your child’s years in the home.
Make a Plan for Living on One Salary
Another thing to consider is whether you and your spouse are both going to continue working once the baby arrives. Many dual-income couples decide that one parent will stay home with the child for several years. This approach can save you the money and hassle of childcare, but you have to make sure the income from one job will support the household. Center-based daycare costs about $10,500 per year for the average American family, and the average cost of hiring a nanny is upwards of $29,000 per year. If you decide on the single-income route, be sure to factor into your decision the costs of diapers, medical care, clothing, and other daily expenses.
Allow Room for Adequate Health Insurance
Another important aspect of financially planning for a baby is making sure you leave room in the budget for the proper health insurance. The ACA has mandates in place for maternity care before and after delivery, requiring all health insurance policies to cover check-ups, routine and emergency doctor visits, and any hospital procedures. You’ll most likely want to stay within the network of your current plan in order to be cost-efficient and keep things as simple as possible. Also, you’ll want to carefully examine all of your options, keeping in mind premiums and deductibles, out-of-pocket expenses, and all the other costs of raising a child.
Having a baby isn’t cheap, but the joys they bring you each day will make it all worth it. While you’ll never regret having a child, you could regret not making the necessary preparations. Looking into childcare costs, having an emergency fund, planning out work and daycare, and choosing the right health insurance will bring you peace of mind. Then, you can savor each moment of your new adventure.
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