Welcoming a baby into the family creates many changes. In fact, other than getting married, having a child is likely the most intense life change anyone will experience. Furthermore, the financial landscape of a family's budget is dramatically altered when a baby arrives. Consider the following tips when preparing for your new addition.
Plan ahead for childcare
One huge expense to consider when you are expecting a baby is upcoming childcare expenses. According to the Center for American Progress, the annual cost of childcare for an infant is higher than yearly tuition costs at the average four-year public college in most states. Of course, if one parent stays home with the baby, childcare costs are not an issue. Therefore, you should decide ahead of time what your plan is to avoid a stressful situation later on.
Most families find they have to keep both Mom and Dad working just to make ends meet. However, with the huge costs of childcare to consider, sometimes it is cheaper in the long-run for one parent to stay home at least until the child is old enough to start pre-K.
Create a budget
If you haven’t already completed this step, it is crucial that you begin living on a budget as soon as possible. Financial guru, Dave Ramsey, suggests you attempt living on a budget for at least three months to get the hang of using a spending plan.
To create a budget, write down your income and each and every expense for a few months in order to determine where your money is going and how your income could be spent more wisely.
Start pricing and buying important baby items
Price baby items at different stores and compare online reviews to determine the best fit for your needs and budget. It is also a good idea to ask parents of young children what items they felt were worth investing in and which were a waste of money. Moreover, experienced parents can help you determine what items to buy secondhand and what items need to be purchased new.
Examples of items that should always be bought new include car seats and cribs because safety regulations change so frequently. Although, if you know for a fact that the items are fairly new (as in purchased within the past year and in excellent shape) you can reuse these items without fear.
Avoid acquiring more debt
Do not charge baby items or take out a loan to pay for shopping needs. Although new parents assume babies need an abundance of items, new babies really only need a bed, and maybe one piece of equipment such as a swing or bouncy seat. All the other stuff can be bought over time. It is a financial mistake to go into debt to buy these items unless it is your absolute last resort. In that case, attempt to find zero percent interest deals and pay the balance off quickly.
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