Babies are adorable and loving -- and they come with a hefty price tag. The average middle-income couple will spend $241,080 to raise a child who was born in 2012 (not including extracurricular activities). Here are six financial tasks to complete to help ensure you're prepared.
1. Build Your Emergency Fund
Do you have a reserve cushion of three to six months of living expenses set aside? If not, get started on building one today by automating your savings and getting that first $1,000 set aside at a minimum. If you're a single-income household, it's best to be conservative and plan for six months of expenses in reserves.
2. Tackle Debt
Parenthood will likely be hard enough without the added stress of credit card and loan payments. If possible, pay down debt prior to the baby's arrival. Set a biweekly or monthly pay-down goal and refrain from adding to balances. By paying off early, you'll save money in interest and be able to shore up your savings faster.
3. Create or Update Your Budget
If you don't have a spending plan, create one using an online program and include changes in:
Groceries. How are items like baby food, diapers, formula and more going to change your spending? Where are the best prices?
Transportation. Will you need to buy a child-friendly car? Does your current one have room for a car seat? What are your options for updated transportation?
Child care. In some cities, paying for day care can run parallel to the amount of your mortgage. Explore and prepare for costs around nannies, day-care groups or individual care. If you're thinking of switching to one income, begin living off one income today and start stocking away the rest.
Medical costs. Contact your benefits department and insurance provider to get clear on premiums, copays and coverage for your new addition. How much will your premiums increase? Are vaccines covered? How often can you expect to go in for check-ups? Now is a good time to take advantage of your employer's Health Savings Account, if offer ed.
4. Get Your Affairs in Order
We don't like to think about the bad things that could happen in life, but making sure you have a plan in place is one of the best gifts you can give your family.
Wills. A will ensures your wishes are documented for your assets and appoints an executor to handle issues associated with your estate.
Guardianship. When appointing a guardian, consider who your children would feel the most comfortable with and what their values are. In addition, look to whom you think would most responsibly and effectively control any funds left to them.
5. Protect Yourself With the Right Kinds of Insurance
Life insurance.Life insurance isn't about you. It's about your family and ensuring they're protected and able to replace any income lost if something happened to you or your partner. Consider your debt levels, income, assets and existing policies to ensure your family has income to sustain its lifestyle.
Disability insurance. Should you be disabled for a short- or long-term period, this coverage will ensure you're paid a percentage of your income.
6. Communicate Often and Craft a Plan
Having a baby can be exciting and stressful. Whether you're going it alone or as a part of a team, check in on your expenses monthly and set SMART goals to keep accountable and on track with spending.
6 Vital Money Tasks to Tackle Before Your Baby Arrives
This advice applies to adults and kids alike. Plan out your shopping list before you head to the grocery store so you’re not tempted by impulse buys, and let any children along for the ride know that you plan on sticking with that list. Small expenditures add up to big money, so try to avoid giving in to any last-minute requests.
If your children continue to insist that you purchase their requested items, then ask them to bring their own piggy bank money. Remind your children they are only allowed to pick something they can afford. It's good practice for grown-up budgeting.
You might not have 20 hours a week to scour multiple publications for the best deals, but if you focus on searching for online coupons, you'll end up saving just as much. Search online for products with the word "coupon" afterward. For instance, if you're looking for Cascade dish soap, search for "Cascade dish soap coupons."
To make sure that you don't waste money on impulse buys, schedule your shopping around paydays. The day or day after you get paid should be your shopping day. Before you go shopping, make a list and make sure it has everything you'll need until the next shopping day on it. Now make a commitment to yourself that you will make what you're going to purchase last until the next shopping day.
Stocking your freezer with frozen meals can help you save money on lunch, since they cost just about $5 each. It can even be a healthier option because they help you practice portion control. Just make sure you're purchasing meals that have no preservatives, and watch out for sodium levels.
Don't waste your time making a sack lunch every day. Instead, prepare a week's worth of lunches on Sunday, and your body will thank you for the extra 10 to 30 minutes of sleep you'll gain each night. If you cook one big meal on Sunday, make sure it's easy to change up throughout the week. Chicken, rice and vegetables all cook quickly and taste great with different sauces and cheeses.
Most families throw away so much food on a weekly basis. A better idea is to turn your dinner leftovers into a lunchtime feast. Apps like BigOven help you use your leftovers to make yummy, new dishes. All you have to do is enter the ingredients you have, and the app will show you different recipe options for your leftovers. You'll save money using food that would have been thrown out.
If you know you have $400 to spend per month on your food budget, that's roughly $100 a week. Whether you shop once or twice per week or use cash or credit doesn't matter as long as you stay within your spending limits. Just be sure to only spend the amount you allotted per week.
Keep your shopping list in a set location so all members of the household can access it. Write estimated prices of the items you are going to buy next to each item on the checklist. It can serve a dual purpose as a price book you can use to guess how much you will spend.
If you've ordered from the kids menu at a restaurant recently, then you know how big the meals are – they're almost as big as meals for adults, and they can cost up to $10 each. If you have multiple children, an easy way to cut down on this expense is to have them share a meal. Not only does this lower the cost of feeding everyone, but it also cuts down on food waste.
Most stores are open late, and without the distraction of announcements, people and maybe even your kids, you can have your own Zen moment. When you are clearheaded, you're more likely to zone in on what you really need and leave out what you really don't. Plus, it's easier to give the cashier coupons without causing any delays for the people in line behind you.
We are a society consumed by all sorts of apps, but if you want to grocery shop, save money and still be lazy, let Favado, an app created by Savings.com, do the work for you. The app will tell you about items on sale from different stores, and if there is a store coupon or manufacturer coupon, it will also let you know that too. (Of course, you can just use it to scan the weekly ads to keep things simple.) And if you're already glued to your smartphone, it's easy to incorporate into your shopping routine.