Baby on the Way? Get These Financial Matters in Order ASAP by Kristin Louis

Photo by Camylla Battani

There’s no way around it: Babies are expensive. Unless you’re rolling in cash, you may be wondering how the heck you’re going to afford everything you need to raise your new addition from infancy to adulthood. While you don’t have to figure it all out now, there are some financial steps you need to take before your baby is born.

Budget for Baby Expenses

From diapers to daycare to health insurance premiums, babies come with a lot of costs. To cover them, you’ll need to adjust your budget. And if you’re like most families and live paycheck to paycheck, you may need to get a little creative to do it.

Eating at home, cutting back on entertainment, and canceling subscription services are all smart ways to save money, but if you’re already living frugally, look for ways to save money on the basics. Shopping online makes it easier to save on everyday purchases like clothing and household goods than buying in-store because you can easily compare prices and search for discounts using coupons, promo codes, and cashback deals. And with most retailers offering free shipping, you won’t pay a premium for buying online.

Assess Your Housing Situation

Are you looking around your home and realizing there’s not nearly enough room for a baby? It’s common to upsize before welcoming a child, but first, you need to budget for it; otherwise you could find yourself house poor and struggling to cover the bills.

Before buying a house, make sure you understand the full costs of homeownership and how your down payment affects what you pay per month. If you don’t have funds for a down payment, consider staying put for a year or two while you save. You won’t miss the extra space before your little one is walking, but you will appreciate the lower costs when you do buy a home.

Save an Emergency Fund

Do you know how you’d cover costs if your car unexpectedly broke down, a storm damaged your home, or your infant needed a late-night trip to the ER? If the answer is no, you need an emergency fund. While everyone benefits from an emergency fund, it’s especially important for new parents due to all the unexpected costs that can occur. Three months of expenses is a good starting goal for your emergency fund, but if you really want to be protected, aim for six.

Buy Life Insurance

There’s another kind of emergency fund new parents need: a life insurance policy. If you don’t know how you’d care for your child if you or your spouse passed away, buy a life insurance policy so you can rest assured that your child is cared for no matter what happens. Although many people are hesitant to get life insurance due to the blood tests that are involved in the process, it’s actually a pretty painless procedure. What’s more, according to Haven Life, these tests can actually help you secure a lower premium, depending on the outcome of the test.

Start Paying Down Debt

It’s hard to get out of the cycle of paycheck-to-paycheck living when you’re in debt. If you want to get ahead financially, getting out of debt needs to be a priority.

There are two main strategies for getting out of debt: the debt snowball method and the debt avalanche. Whichever one you choose, the most important thing is staying consistent. Falling behind on debt for even a month or two can erase your progress. To avoid missing payments, automate credit card and loan payments so you pay down debt without thinking about it.

You don’t need to have a ton of money to raise a child, but you do need to have a plan in place. Before welcoming your child, make sure you know how you’ll cover baby expenses while staying afloat financially. While adding a child to the family requires some adjustments — not all of them easy — the joys of parenthood are well worth the effort.

Kristin Louis is a former advertising copywriter and has two rambunctious boys, 10 and 7 years of age. She created ParentingwithKris.com to share her experiences about the trials and tribulations of parenting.