When you’re caring for a newborn, it can be hard enough to carve out time, let alone stay on top of money tasks. In the chaos, you may miss a bill payment or impulse-buy random things online to help with infant care. Suddenly, your credit scores are down and your budget is stretched.
The last thing you’ll want to do is leave money management up to chance when your baby arrives. Here are ways to start financially nesting.
Take advantage of the pre-baby months to make some big decisions, including:
Health, life insurance for the baby
Giving birth or adopting a child is considered a “qualifying life event” as far as health insurance coverage goes. That means you won’t have to wait for open enrollment to add your child to your plan, but you’ll have only a limited amount of time — about one or two months — after the birth or adoption to do so.
Check your insurance plan’s rules to know what your deadline would be. If you and your partner have separate plans, compare costs and decide who will take the baby on as a dependent.
A life insurance policy can provide vital funding for your family if something were to happen to you, your partner or both of you.
Getting your budget baby-ready
From smaller ongoing purchases to massive costs like child care, those baby expenses are going to add up. If you’re taking unpaid parental leave or one parent is leaving their job to handle caretaking full time, the money coming in is going to change dramatically.
Start by identifying cuts you can make or bills you can renegotiate to bring down costs. If you have credit card debt and there’s room in your budget to pay it down aggressively, that can free up more money for necessities later. Begin to price out expected ongoing baby expenses, like the monthly cost of day care, so you can get a general sense of how your spending will change.
Next, automate bill payments for recurring costs, like credit cards, utilities and mortgage payments. If you rent your home and normally mail a check to your landlord, use your bank’s bill-pay feature so it’ll send checks on your behalf. Set up whatever you can in advance so these services will continue without interruption and late fees.
Expect the unexpected
Don’t neglect to make room in your budget for unexpected costs.
Emily Rassam, a senior financial planner at US-based Archer Investment Management, found herself spending more on self-care than she planned. “My interest level in grocery shopping and cooking plummeted during pregnancy,” she says. That meant more of her food budget went toward restaurants and takeout.
Rassam also recommends confirming child-birth expenses with your insurance company in advance. She learned, for example, that the hospital she planned to deliver at was in her insurance network but the anesthesiologist wasn’t. In that situation, getting an epidural would cost more than anticipated.
