Today we welcome a guest post from fellow blogger, Kate. Kate is the blogger behind the MaternityGlow blog, where she writes helpful tips & tricks for new parents.
It’s no surprise that becoming a parent for the first time can be ridiculously expensive and financially overwhelming.
My head began to spin just thinking about all hospital bills, baby expenses, and a college fund.
What should I do? Where should I start?
But as a naturally frugal person, I knew that with some careful planning and research, things would come together and I would survive my first year financially with a baby. (And I did!)
And you can, too.
Here are a few helpful tips for preparing your finances for your first.
Tip #1: Save for Your Stay
The first thing I did after leaving my first ultrasound appointment was call my insurance company.
I learned that on average, an uncomplicated natural birth could cost between $3,296 and $37,227. A C-Section could range from $8,312 to $71,000!
Before you freak out, just know that insurance covers most of these expenses (mine ended up covering everything). I had them answer a detailed list of questions that I prepared prior to the phone call.
You need to know how many nights you are covered to stay in the hospital for a natural or cesarean birth, know your co-pay, deductible, out-of-pocket maximum payment, and whether the hospital and doctors you will be seeing/using are covered in your network.
So, starting with an insurance phone call is the first step to being financially prepared for your baby.
If you do not have insurance, there are a lot of federally funded programs that will assist you with these costs, or help you enroll in a program.
This way, you’ll have an estimate of how much you need to put away, and how much should be covered.
Tip #2: Register Wisely
Little baby outfits are adorable. As are teddy bears and toys. But, let’s face it: the whole point of your registry is to make sure you have the necessary items to bring a baby into your home and care for it properly.
Keep your registry small to ensure you definitely get the must have items: a crib, a stroller, a car seat, a high chair, etc.
You could also save oodles of money by putting diapers, wipes, and formula on your wish list. This will save you hundreds of dollars in the long run!
I have a whole guide on how to hack your baby registry if you want to read more.
Tip #3: Consider Life Insurance
Having a baby on the way really made me get my life together!
I wanted to make sure I had all my ducks in a row when it came to creating a life for my child if my husband or I were no longer in it.
It really stinks to think about, which is why I think a lot of people avoid purchasing life insurance, but I think it’s the prudent thing to do once you have kids.
Different companies offer different protection plans and monthly, yearly, or quarterly payment options. Because money was a little tight for us, we opted for a plan that covered our house in case anything happened to us.
Remember, you can always increase or decrease your level of coverage over time.
Tip #4: Consider a 529 Account
Did you know the average tuition at a 4-year private college is more than $31,000 … per year!
So if you’re thinking of contributing to your child’s education (or even sending them at all), you’ll want to get saving early, and a 529 savings account is a good option.
As many of you know, a 529 allows you to put money away each month so you can use the funds later on down the road for your child to attend the college of their choice (although some rules and restrictions apply; be sure to read about the account thoroughly or talk with an accountant).
A 529 does offer some tax breaks, and is a reasonably trustworthy place to store money for your child’s educational future.
Tip #5: Plan Out Your Childcare
Did you know that the national average baby sitter or nanny charges $10-$15 an hour?
I didn’t! But, I found out quickly.
I started looking into childcare while I was still pregnant. I knew that daycare wasn’t for me, so I wanted to hire a home care sitter.
Because I started shopping around early, I was able to put aside money to cover at least the first three months of care.
It’s a good idea to visit daycares, interview sitters, and browse online for facilities that meet your needs and your budget!
Truthfully, you will never be fully prepared for raising a child.
But, you can get pretty darn close!
One way you can relieve a huge amount of stress is to make sure you tighten up your budget and get your finances in order before your baby arrives.
It will be one less thing to worry about, and you will help you little one get off to a great start in their new world!
What do you think is a great financial step in preparing for a baby?
*Image courtesy of Flickr
I agree with all of this. I was lucky I got paid for half of my maternity leave, but we had to save for the rest. To this day, the biggest expenses of having children have been our hospital bills (4k each time) and the time I took off work. Kids are pretty cheap if they are healthy and you can buy most of your gear used.
Great point Holly — when they’re young, kids are actually pretty cheap if they are healthy!
Thank you so much for letting me contribute, Laurie!
Gladly, Kate! Thanks for the great post!
This is totally true! The most happy moment in your life and also overwhelming.
When me and my wife had our first child, we too we’re a bit overwhelmed financially since we are living on just one income. But then we are blessed to have somebody on the family who can give us clothes,other baby stuffs and the like. We also talked to our insurance provider about the cost related to the procedures and the like. With this, you can prepare and adjust your budget.
Thanks, Allan! Great advice about saving money by using hand-me-downs such as food and other baby stuff.
Great advice. We called the two local hospitals our insurance covered and found out which was less expensive. One hospital offered a 30% discount if you paid your bill before leaving. That adds up to several hundred for a maternity stay!
Wow, I haven’t heard of that before — 30% is huge when you’re talking about a maternity stay!
Good advice. With our first child, my wife was working at a job that paid hourly so when she took off, she wasn’t paid. We saved before hand and tried to live just on my income so that we wouldn’t be caught off guard when my wife took time off. Fortunately I have great insurance so that was mostly covered.
“Save for your stay” is a great tip and one most couples miss! I had medical insurance through my job but it didn’t cover everything and I had to pay over $1000 out of pocket once my child was born. One definitely needs to save up! 🙂
I’m really glad you mentioned life insurance. I think that’s a step many new parents miss. We didn’t have any insurance until our first child was born. It wasn’t really needed until then. And I agree completely with your assessment…you’ll never be fully prepared to raise a child. 🙂
We opened a whole life insurance policy for our daughter when she was born. It’s only enough to cover funeral/burial, but it’s only $8/month and something she can have for the rest of her life.
Life insurance! It is really a step to protect and secure your baby. It’s a must for my kids.
Childcare is one of the highest expenses we have. Although we normally hack any other expense to make it cheaper, daycare has been impossible to hack and find alternative ways to benefit from it at a lower costs, if anyone have new ideas, they’re welcome 🙂
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