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Welcoming a new baby is an exciting time for many families. There is so much to prepare before baby is born. It’s especially important to prepare financially for baby’s arrival.
In the U.S., the average cost of having a new baby ranges between $5,000- $11,000 according to Fair Health. I’ve seen some hospital bills up to $20,000. That’s with insurance!
And once baby is born, there are ongoing costs you’ll need to consider as well. According to a study “Expenditures on Children by Families, 2015” by the USDA, Americans spend an average of $233,610 on their children from birth to 17 years old. That’s without college tuition!
To help with the transition of a new child into your family, whether it’s the first or the fifth, there are several things you can do to prepare financially for baby.
1. Check Your Insurance
Even if you have had a baby before, double (and triple) check your health insurance coverage. We have a 3 year gap between our kids and the out of pocket costs were significantly different between the two children.
While the hospital bill for our first was only $200, the hospital bill for our second child was closer to $2000! By preparing ahead of time, we were able to save up slowly and pay the larger hospital bill in full.
Don’t wait to call your insurance: Call during the first trimester. When you call the insurance make sure you ask about:
- Co Pays to see your OBGYN and any prenatal specialists
- Cost of Delivery – Check to make sure the hospital your doctor is affiliated with is in network
- Free breast pump – You may be eligible to receive a free breast pump through your insurance. Find out the details from your insurance provider
- Find out what the procedure for adding your child to your health insurance is.
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2. Make Your Post Baby Budget
As you get closer to your delivery date, you should go ahead and prepare a post baby budget. The first 3 months after baby is born, you want to have as much prepared ahead of time as possible.
This is not to say that your budget won’t change, but having it prepared will make any modifications much easier.
If you will have a reduction in pay after your baby is born, it’s important to have a good look at what your income and expenses will look like during that time.
If you are new to budgeting and don’t have a pre-baby budget you should start now. Check out “Expenditures on Children by Families, 2015 “to help you get started.
3. Set Up Auto Pay
If you don’t have your bills set up for auto pay, now is the best time to do this. Those first few months can sometimes be a blur and forgetting to pay bills can happen.
To avoid any additional stress or overdue fees, go ahead and schedule your bills for auto pay.
If you have bills that can’t be paid by auto pay, set up a reminder on your phone or calendar to pay those bills!
4. Pay Off Debt Before Baby is Born
Before baby is born, plan to pay off as much debt as possible. Even if you plan to return to work you will need room in your budget for diapers, bottles, clothes and childcare.
Removing or reducing debt payments from your monthly expenses will give you more money for all the things baby will need.
5. Create An Emergency Fund
In addition to paying off debt, it’s a good idea to have at least $1,000 in an emergency fund. This will help cover any unanticipated costs.
If one parent will be quitting their job once baby is born, you should aim to have 3-6 months living expenses in savings.
6. Make a Will
This is one thing that many families ignore, but one that is so important especially once you have children.
It’s not just about the distribution of your assets should you pass, but also about appointing a legal guardian for your child. You can easily find a template for a last will and testament online. Just make sure you follow the instructions for your state.
If you already have a will, don’t forget to update it!
Adding a new member to the family comes with a long list of responsibilities, and the financially responsibility is something you can prepare for.
My advice is not to try and tackle everything at once. You have 9 months to prepare so take advantage of that time!
Meet Guest Blogger Jill
Jill is a work at home mom to two sweet and crazy kiddos. Her goal is inspire other moms to get organized and gain freedom through simple strategies to manage their finances, home, and life.