Having a baby comes with a price tag and unless you prepare your finances, the cost may shock you. Now is the best time to begin preparing your baby budget and get a handle on finances for your new arrival and anticipated first year baby costs
Evaluate your financial state
This is the most important part to evaluating your baby budget, so do this step right away. The best way to get a real view of your financial state is to track all your incoming and outgoing expenses for one month. Don’t change anything when it comes to your finances yet. Right now you want to see exactly what you are spending on your home, groceries, eating out, cars, utilities, etc. before adjusting.
This will give you a true snapshot of how much you spend and save.
Needed items
Calculate all the items you’ll need, the estimated quantity and overall cost of each.
Next, add all the line-items up to find the total cost of baby for the next year.
Be sure to calculate health insurance deductibles for labor & delivery
Doctor co-pays for each additional visit you may take (sick, odd visits)
A lot of items you can ask for on your baby registry, but be cautious in your budgeting in case these are not fulfilled. It’s best to plan on them, just in case.
Call your health insurance company to find out what your health insurance will increase to when you shift to a family plan. be realistic about what items you really need
Some baby gear like a wipe warmer or bottle warmer for your car sounds nice, but aren’t necessary. A crib, mattress, diapers and wipes are necessary.
It’s up to you to decide what you need, but shopping secondhand and accepting hand-me-downs are free or have minimal costs and are where it’s at.
Single income
Determine if you can live off a single income or not.Once you have a snapshot of your expenses and money flow, you now have a better idea of where your money is going and how much of it you have left each month. Fingers crossed for a surplus!
Look at your annual baby expenses and divide it into monthly chunks.
Keep in mind some of the costs such as labour and delivery may need to be paid quickly and won’t be a monthly expense unless you need to go on a payment plan, and then they would. The more you can get the big stuff out of the way, the less monthly expenses you’ll have.
First, look at your budget as a two-income family. Add in the monthly baby costs to this budget and see if you have money left-over, or you’re over budget.
Next, look at your budget based on a single income. Add in the monthly baby costs to this budget and see where the numbers fall.Now, it’s time to evaluate what happens after baby arrives based on these two strategic budgets. Are you a two-income family who wants to remain this way, or shift to a one-income family once your baby is here?
Now that you know what the big picture of your budget looks like, you can take an honest approach to answering the questions:
Can you live off one income if you chose not to return to work?
Can you afford to live off one income… are there too many sacrifices to or will you be able to keep the lifestyle you want?
How much of your budget do you need to adjust to make a single income work for you?
Does it make financial sense to pay for childcare on two incomes? (if your take home pay is minimal after you deduct childcare costs… does this still make sense for your family?)
If you want to keep working, will it be part time or full time?
Where can you cut numbers?
Breastfeed to save on formula (if you can)
I know not everyone is able, or chooses to breastfeed, but this can really help with your finances because formula can be quite expensive – and you’ll need a lot of it each month. Breastfeeding is free food for your baby. FREE.
Start saving & stockpiling early
It’s a great idea to start creating a baby fund now – even before you’re pregnant or the minute you find out! Also, start stashing away boxes of diapers, wipes and essentials when you have the extra money for it.
Source: www.thepragmaticparenting.com