One of the most important parts of planning for a family is getting your finances in order. If you’re planning on becoming a parent, you’ll need to make sure you’re financially stable. If you need to move into a smaller house or have a mortgage to pay off, those are things to consider. Here’s how you can start preparing your finances month-to-month when you’re starting a family.
Start paying off debt as soon as you find out you’re expecting. You can do this by consolidating debt, paying off your largest debt first, or use several different strategies. Start paying off your credit card debt first. If you have balances of thousands of dollars, then you’re paying hundreds in interest fees. The money going to interest is something you’ll need when your baby arrives, so make sure you find a way to pay off large debts as quickly as possible.
Consider transferring your debt to a credit card with a lower interest rate so you can pay one bill and immediately start getting rid of debt.
After you devise a plan for getting rid of debt, you should begin tracking your spending if you aren’t already. With a baby on the way, you’ll need to revise your budget and keep all of your expenses no matter how small. Careful tracking can help you get a better look at your spending habits, so you can determine areas you can cut down.
In month two, you should update your beneficiaries to your estate plan, including your investments and life insurance. Whenever you have a new life change, such as becoming a parent, make sure you look at all of your statements.
During the third month, you should check your credit score or credit report. Even if you have never paid a bill late, you may have errors on your report you’ll want to catch. You can save time by correcting mistakes before your baby comes or you purchase your first home for your family. Remember, not only do lenders look for your DTI ratio, but they’ll pull your credit report to make sure you can repay a loan. So if you are planning to purchase a home to support your growing family, you need to have a handle on your credit.
During month 3, you should also finalize your budget and crunch the numbers. Look at all of your expenses over the last few months and put them in a budget tracking app or spreadsheet so you can see a clear picture of your expenses versus your income.
As a parent-to-be, your goal should be trying to find ways to save money instead of breaking even. You can also start looking for side gigs so you can earn more money while pregnant and after the baby is born.
You’re almost halfway into your pregnancy by now, which means you’ll need to talk to someone in the HR department at your work to plan maternity or paternity leave. Employers are legally required to give new parents 12 weeks of unpaid leave. During this time, your employer will still pay the usual portion of your healthcare benefits.
Also, in the fourth month, you’ll need to practice patience and self-control. While you set a new budget so you can have more to spend on the new baby, you may think you can dip into your savings to treat yourself before the baby arrives. Don’t. You need to make sure you’re always putting money away so you have enough to support your growing family.
During month five, you should start evaluating your daycare options. After month five, you may be too tired to call up daycares or go visit them in person. You can also begin interviewing nannies if you don’t want to look into daycare options. If you are interviewing nannies, make sure to check references and get a background check so you can confirm they have the experience required to watch your child when you’re gone.
During the sixth month, you’ll need to make yourself ready for anything. If you don’t have life insurance, now is the time to buy some. You should also start writing your will if you don’t already have one. Your last will and testament should state who will become the guardian of your child if you pass away. While you might not want to think about this during a time of excitement, it is important because you can’t predict the future. What you can do, on the other hand, is protect your child’s future even before they come into the world.
Now is the perfect time to set up a retirement account if you don’t already have one so you can continue planning for the future while you wait for your baby to arrive.
If you’ve followed this guide, you’ve already done a lot of the hard work by months seven and eight. However, there are some other factors you might want to take into account. Instead of worrying about purchasing everything the baby will ever need, contact friends and family members who have children to see if they’re willing to give you any infant clothes or unused toys so you can save money. People are very generous when you’re expecting, so asking around can help you save money.
Most health insurance providers give you thirty days to add your newborn to your policy, so make sure you do so as soon as possible. Aside from that, the final month of your pregnancy should allow you to put your feet up and relax after doing all of the financial legwork in the previous months.
As soon as you decide to start a family, you need to start getting your finances in order. While you and your partner may have always been financially responsible in the past, there are new considerations to make involving your future and the future of your children, such as saving as much as possible for emergencies and higher education. By planning, you save yourself time and stress later on so you can enjoy the process of starting a family.
About the Author:
Marné Amoguis holds a B.A. in International Business from UC San Diego. She is a contributing writer at 365businesstips.com where she loves sharing her passion for digital marketing. Outside of writing, she loves traveling, playing music, and hiking.