With the excitement of a new baby, parents often forget about the importance of financial preparation for the arrival. By not planning wisely ahead of time, parents can see bills add-up very quickly once the baby comes along, adding stress and pressure to an already financially overwhelming situation.
The best solution? Preparation. Follow an organized budgeting process to better handle the expenses of your family’s newest addition.
Sit down. Get your paper, pencil and calculator ready. Baby isn’t here yet and now is the perfect opportunity to evaluate just how much maneuvering space you have in your monthly budget. Calculate both your spouses’ salary and your own salary or maternity leave, and subtract your average monthly expenses so far (car, electricity, food, rent, insurance, etc.).
Calculate the one-time initial baby expenses
Take into consideration hospital costs, nursery set-up, maternity clothes, furniture, baby-proofing, bedding, bottles, baby baths, strollers and any other relevant and essential expenses. Do you have a baby shower coming up? Make sure to tell your guests what you still need (don’t be ashamed to be specific – they want to help!) or register at a baby store. This will make your initial expenses considerably less and give you the ability to allocate the money towards other needs.
Calculate future ongoing baby expenses
Once baby is born, budgeting will get more difficult to track and control. The baby will have ongoing needs, whims, doctor checkups and colds, and predicting just how much this will cost is extremely difficult. For now, make a list of the known costs, such as food and formula, expected monthly doctor visits, nappies, and even necessary mommy products such as nursing pads. Expect to continuously purchase infant clothes as the baby will grow out of his clothes fast. Be as concise as possible in calculating your monthly ongoing baby costs.
Now that you have a general idea of what your budget will look like on the first and following months, you have the opportunity to really evaluate how to be more strategic about your spending.
Explore options that could save you money
Does one supermarket charge less for the same formula than another? Have you found a store that sells good-quality baby clothes for less? Can family members contribute clothes their own children have grown out of? Go through the lists of necessary items and purchases you previously listed and research how to save money on each of them. Sales, coupons and discounts are often advertised on mommy blogs and websites, even for the most unexpected of products like nappies. Start following them and learning their tricks!
When you are purchasing items, evaluate how necessary they are
Babies outgrow their clothes fast; have you purchased more of one size than necessary? Are you finding yourself constantly purchasing baby toys, educational aids, books and music? Sure, they are irresistibly cute but after a certain point, the amount of toys you buy may be more than your baby needs. Purchase thoughtfully and you won’t be spending more than you can handle.
Evaluate other costs in your life that can be tackled and lowered now
In a few months, your life will be far more hectic and busy as you care for your little one. Now is your chance to sit with your partner and evaluate the current costs of your services and goods. Is your insurance premium too high? Is there a better, less expensive calling plan for your cell phone? Have you evaluated whether you have the cheapest credit card deal? You would be surprised how easy it is to lower your monthly expenses through one quick phone call or by changing service providers.
Don’t be scared to hire a financial advisor
If this is all too overwhelming, hire a financial planning advisor. They will lead you through the path and ensure that you don’t spend more than you can handle. In the long run, you’ll be thankful that you invested your time to properly plan out your budget.