First comes love, then comes marriage, (you know the next line...sing it with us) and then comes you with a baby carriage! That's right, in every married couple's life the thought of starting a family begins to lurk into your minds. For some, you may have even heard "baby talk" from pushy wannabe grandparents the day you returned from your honeymoon. If baby is on the brain or already in the belly, there are several important issues to consider and discuss. Along with this special bundle of joy, comes a bundle of money matters. We've highlighted for you what you should think about during the 9 months of preparation you have before the blessed event!
First Month - Medical Check-Up
You've heard the old saying, "It's as expensive to come into this world as it is to leave it." According to the Health Insurance Association of America, the average bill for doctors' fees and hospital charges runs around $6,400 for a normal delivery and roughly $10,600 for a cesarean section - and that's not even counting prenatal doctor's visits or such common (but costly) tests as ultrasound and amniocentesis. (Source: www.parenting.com) With that said, the first step you should take is to review your medical insurance policy. Most hospitals will go over the exact costs you will have to pay and what your insurance will cover typically during your second prenatal visit, closer to the end of your first trimester. Ask questions, contact your insurance company if something does not sound right and develop a savings plan for any out-of-pocket expenses you may endure. Luckily most insurance programs cover the majority of the costs.
Fun Tip: Now is a good time to pick up a copy of What to Expect When You're Expecting, a popular pregnancy guide that details each month of your pregnancy. It has consistently topped The New York Times best-seller list in the paperback advice category.
Second Month - Employee Benefits
You still may not be ready to share your news with friends and co-workers, but it is a good idea to pull out the old, trusty employee handbook to review your employer's maternity leave policy. Most companies follow the Family Medical Leave Act (FMLA) which grants eligible employees up to 12 weeks of leave for the birth of a child. It is up to your company to determine how much pay you will actually receive during that time. Ask your Human Resources department what you need to do to get the maximum amount of pay coming to you. Disability usually pays a percentage of the time you are out. Find out what that percentage is. Ask if you may have to bank a certain amount of sick hours to be eligible for disability pay. Save up vacation time and evaluate if you can financially risk taking the full 12 weeks. You may need to start saving your pennies so you can spend more time with your little one.
Fun Tip: In 2000, the US Department of Agriculture estimated that the cost of raising a child from birth to age 18 was over $160,000, and that did not include the impact of inflation or college. (Source: www.parenting.com)
Third Month - Child Care Costs
In some cases, child care costs have become so expensive that some parents are electing to quit work and stay home. This is the time to start investigating and comparing costs of day care centers. In fact, the good ones will already have a waiting list. Sign up as soon as you find the one you want. Check to see if a relative or friend can care for your child instead, but be financially prepared in case that person is unable to fulfill their obligation to you. Nannies are also becoming very popular and may cost less. Research your options before you make any decisions. Practice saving the amount you would spend each month on child care now to get a better idea of what you can actually afford. Plus, don't forget to figure in all the extras that a nanny, grandmother or day care center may need like diapers, food, transportation, etc.
Fun Tip: Ask your employer if they offer programs known as dependent-care spending accounts that in effect allow parents to turn as much as $5,000 of their annual child-care expenses into a tax deduction. The potential savings could end up being more than $2,000 per year. Plus, ask if your company has partnered with any local child care facilities that will give discounts to employees who use their services.
Fourth Month - More Room to Nest
As you begin to outgrow your normal clothes, many parents-to-be also start outgrowing their home and lifestyle. Sit down with your spouse and discuss if you will need a bigger vehicle to accommodate your new family. You may need or want to remodel your current home for more space or to add a playroom. You should also start thinking about schools. While your baby won't be hitting the books for another few years, your home may not be zoned for the school you want your child to attend. Start saving now to move to the location you ideally want to be in when your child starts school. And if you're considering private school, practice saving the amount you need each month for tuition to see if you can afford it.
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Fifth Month - Big Changes
As you're picking out paint chips and nursery bedding, stop and decide if your current investments, accounts and life insurance policies fit the look of your new family. Review your beneficiaries and make notes of those accounts you would like to update once the baby arrives. Analyze your life insurance policies to determine if your current coverage is still sufficient with your new addition on the way. Speak with your attorney about revising or creating a will if you don't already have one.
Cool Hookup: Other than the birth certificate, adding your child to your accounts and policies may be the first time you actually see your child's name in print. Make sure you've picked out a good one. Click here to research baby names, their meanings and which ones are popular now.
Sixth Month - Shopping Spree
Diapers, bottles, formula, car seats, strollers, baby furniture...the list of everything you need to prepare for baby can be endless and so can the bills. For some reason (you probably have already noticed), the minute you find out you're pregnant, in come the offers and discounts for baby products. Take advantage of them! Store up your coupons even if they are for different types of diapers. It will give you a chance to find out which brand works best for your baby. Your doctor's office may also give you a packet of information with free baby samples. Read over your materials and make notes of product websites, like Pampers and Huggies, that allow you to sign up for samples or discounts. The more discounts and samples you can use the better your savings.
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Cool Hookup: Check out www.couponmom.com, which gives links to downloadable coupons, free-sample offers and more.
Seventh Month - Cradle to College
With today's growing costs for a good education, it's never too early to start saving for your child's college tuition. Take the time now, while you still have it, to review the investment options available to you. There's a lot of information out there on state 529 college plans, which offer tax benefits. If you go that route, study the specifics and find out which state offers the best plan. You don't have to go to a school in that state to sign up for their 529 plan. Other savings options include mutual funds, money markets and IRAs. Speak to an investment professional for advice on the best route for you.
Cool Hookup: Check out MSN Money Central College Savings Calculator to figure out how much you have to save to afford college.
Eighth Month - Life's Little Surprises
While college is definitely one of the top investments you should consider when starting a family, there are so many other little surprises and expenses to prepare yourself for along the way. Whether it's attending kids' birthday parties, participating in dance lessons or basketball camp, taking a family vacation to Disney World or even planning your daughter's wedding, all of these special moments add up. Take a moment to re-evaluate your budget and to determine ways to cushion it. Develop a plan to pay down your debt. Set up a specific vacation fund or Christmas Club account. Add a spot for gifts and activities. The sooner you start, the easier it will be to say "yes" to your child's special requests.
Shameless Plug: When setting your goals and saving for the “small stuff”, set up a U Name It Savings Account. Our U Name It Savings accounts are designed to help you achieve your short-term goals without tapping into your regular savings account. Plus, you can name it whatever you want. For the “big stuff”, our investment experts can assist in creating a personal financial management program you can follow in order for you to achieve your monetary objectives. For more details, click here.
Ninth Month - Raising Financially Fit Kids
From Day One, we worry about our child's health. We worry about their weight, their height and their developmental skills. Are they getting enough milk? Do they have all their vaccination shots? Are they growing as they should? Well, we need to also figure in their financial fitness as well. Start teaching your children the principles of savings now. Before their first birthday, set up a savings account in their name. You can put it under your account number or set up an individual one. If they receive birthday money, put it in their account. As they get older, encourage them to do the same. Talk to them about putting their allowance in savings instead of splurging on the latest toy. They may not appreciate it at first, but when it comes time to buy their first car, they will feel good knowing they will be able to help pay for it.
Cool Hookup: Click here to learn more about our special Kids Saving School. It’s a great and fun way to teach kids early about the value of saving. They just need to be under the age of 12 to join! (Once they turn 13, they will become a part of our Edge Teen Savings account.)