How to Prepare Your Finances Before Welcoming a New Baby

Welcoming a new baby into the household can be exciting and frightening all at the same time. If you're a new parent and don't already have children, you might be shocked at the financial implications of having an infant living in the home. By preparing your finances to welcome your new bundle of joy, it'll be easier for you and your loved ones to be fully ready for their ultimate arrival.

Start Living on a Budget

It's a smart idea to live on a budget when you have children. The reason this is so advantageous is because you'll always have extra money to fall back on in an emergency. In the past, you might have thought nothing of going out shopping and spending hundreds in a day. However, after having children, it's crucial that you cut back on overspending and put more effort into actually saving this extra money.

Create a College and Savings Fund

Your child will eventually need to go to college in order to obtain the education that they need in life. Creating a special account specific to their college tuition fees can be a great way to avoid financial problems or career-related issues later on. Similarly, you'll want to start saving money in your own account for future emergency expenses and retirement. You can set up automatic transfers to these accounts to prevent forgetting to put cash into them. Investing in your child's future is absolutely worth it from early on in their life. Explore your options through The Children's ISA.

Pay Off Student Loans and Debt

If you've racked up a lot of debt over the years or are still bogged down by student loans, it's time for a complete financial makeover. Before welcoming your new baby into your life, it's important that you don't have credit card bills, creditors and loan sharks coming after you. The best way to go about eliminating these debts is to refinance and consolidate. By refinancing student loans from Earnest, you're able to save money and reduce costly monthly bills. If you have old, maxed-out credit cards, now's the right time to start putting more towards the balance due.

Understand the Costs of Childcare

After your newborn is brought into the world, you may be able to devote all of your time to them for the first few weeks or months. However, the vast majority of families rely on two incomes in order to keep the bills and utilities paid. This is when you'll need to discuss and save money for childcare. Childcare can be as simple as having a relative watch the baby during the day while you're at work or it can become as costly as putting them into a local daycare or hiring a babysitter. By understanding how much you'll need to make this care possible, you'll be more likely to have the money saved for it.

Prepare for Medical Fees and Expenses

Pregnancy, birth, infant care and the insurance-related costs of raising a family can rack in a lot of medical debt. Before contemplating adding a member to the family, take a look at insurance coverage, costs and any out-of-pocket fees that you'll be responsible for paying. Many states have their own low-cost plans available, making health insurance more affordable. However, you'll still want to look at the level of coverage that you're receiving and what you can expect when actually using it.