Planning to have a baby involves much other planning apart from just booking a hospital bed and doctor. You have to be sure of taking the responsibility with complete dedication. Having a baby is an addition to the family, which means that there will be an extra share in everything. Therefore, there is additional pressure on the finances, so it is essential to look at the finances and plan it properly.
Well, it may be difficult to imagine your child’s graduation farewell when they are still inside your belly. But that time will come shortly. Meanwhile, it would be great if you fixed yourself for this family addition. There will be lots of new costs that are expected once the baby arrives. There may be costs involved at a different level, from buying diapers and baby products to spending on a school or a daycare center.
According to a survey, raising a child costs different in every country. The cost depends upon the country’s economic situation, whether the cost of living is high or moderate. It is essential to plan your finances while planning a baby as the expenses may give you small shockers. Hence, budgeting is required at every step.
Choose the proper healthcare and insurance.
When you have decided on a baby, either has it or adopts it. Some life-changing events are involved in the process. Considering your health care plan, you have to understand the terms and conditions of your health care plan properly to select the best suitable plan for you and your growing family.
If you do not have a healthcare plan, you can always go for Health Savings Account (HSA). This account allows you to put around $7,100 in pretax dollars to utilize for your medical bills. This money also caters to some of the pregnancy-related costs such as:
- birth classes
- prenatal vitamins
- breast pumps
Post the baby’s birth, and some baby essentials are also included in this healthcare plan, such as first aid kits, thermometers, baby sunscreen etc. This healthcare plan covers some of the basic expenses of your baby and helps you save on your finances.
Use budgeting apps
You have to understand the upward trending graph for the expenses of your growing family. Embracing all the values with proper pre-planning is the key to practical financial planning. You can plan funds each month and maintain a record of your expenses. This way you can see all your cost and categorize according to the level of importance.
Also, you can set a limit for your spending in every category. Ordering and monitoring your finances allows you to have a space for unexpected costs and events. If it takes a toll on you, you can use different budgeting apps and software obtainable online. Using these apps or software is beneficial as they are accurate and provide other tracking options for your finances.
Buy a life insurance.
It is difficult for anybody to think about what will happen to their family if their partner passes away in an unexpected event. To protect your family from any financial miss happenings, plan to buy life insurance as soon as possible. Life insurance can be a savior for you and your family in critical times.
Of course, you have to add money every month to your life insurance policy, but it will help your family and keep you financially safe at the time of need. If you take life insurance in your name, then your family and kids are entitled to that money if something happens to you. It is an excellent way to keep your family safe as it ensures to take care of your family after you.
Emergency savings fund
It is always advisable to build an emergency fund to stay financially safe in the future. The future is unpredictable, and anytime there may be an emergency requiring you to spend money. An emergency fund safeguards you from such situations and balances your personal and financial life. It protects you from getting stuck in a debt cycle.
These emergency expenses may be an immediate car repair, a sudden medical requirement etc. Ideally, it would be best to keep a buffer of 3 months of your monthly expenditure in an emergency fund.
If you find it difficult to be regular in adding money to your savings account, you can automate this process. Connect your savings account to your savings account and let the amount get deducted every month from your account towards your savings. It saves your time and, at the same time, keeps on adding to your savings fund.
The loan way
To be financially stable, you can opt for a way that should be the last resort is borrowing. For example, you can think of borrowing a loan from the market and pay it back on time. In the UK direct lenders are offering various loans, including very bad credit loans. Keep it as the last option to cater to your expenses, as paying back can add to existing financial pressure.
Opt for new family tax breaks
As new parents, you may be in a dilemma as to whether save for the future or to spend on the present. Both things are equally important and have to be done tactfully. You can always look up to some special exemptions and credits that will lighten your financial burden and make things easier for you. There are few perks offered to new parents and their newborn baby such as:
- Adoption credit
- Child tax credits
- Medical deductions
- Earned income tax credit
You can seek trained help and get to understand these advantages in a better way. For example, a tax professional may make you know these tax deductions and exemptions in a better way. Always ask for proper receipts when getting involved in the tax exemption and deduction process.