Babies Cost Money!
Hey Bastion Readers,
Welcome back to the Parent Digital Duo, a resource dedicated to preparing professionals for life as new parents. It has been a massive month for us, as we welcomed our second baby into our home. I am so excited to share my experience with you all to hopefully guide you on your journey.
It is no secret that raising children takes a great deal of financial commitment. This edition will aid parents in putting earnings to work while you take care of all the other big ticket items for expanding your family. Here are my tips for hitting those financial goals and ensuring backup cash is ready for the curve balls children love to throw:
High Yield Savings Account:
Open a high yield savings account (if you do not already have one), to park your savings as you prepare for the due date. While traditional investing is great for excess earnings, it is always best to have at least some funds related to child care readily available. Put your money to work with an interest earning account while you plan the baby shower, put together the nursery, and gather supplies for your new addition.
Testing, clinic, & hospital bills:
Explore your care group’s website, call your testing facility, or even reach out to your insurance provider to gather information on costs related to the larger financial burdens throughout the process. The cost of hospital bills can be tough to predict as they are often estimated with terms of certainty like “Normal live birth, traditional delivery” at the most basic tier. The reality is that complications can quickly arise for both mom and the baby that can drastically change an estimate provided on a website. Aim to create a range for the cost of pregnancy for your situation using the information you can gather. Use your predicted cost range when considering your insurance deductible and coverage for all the different tests, scans, and upcoming charges.
Monthly cost increases:
Research the cost of the fixture items you will need every month to care for your child — think diapers, wipes, formula, skin care, and leave some room for miscellaneous supplies like bottles, pacifiers, and clothing as your baby grows. To simulate your new financial burden, consider moving the aggregate cost from your spending accounts into your high yield savings account each month. You can work on growing your baby funds while adjusting to the new expenses before the baby arrives. Reducing your financial stress and feeling comfortable with a plan can make the first few months feel less hectic.
Expect plans to fail:
Build up your financial reserves because your plans may fail. Even our best estimates, preparations, and expectations fall short. The high rated item you thought would be perfect, may not work for your baby. All the cute clothing you had washed, folded, and organized for the baby… might not fit. There are always sharp turns when it comes to preparing for parenthood. Deploy those backup funds to stay sane and ensure your little one has everything they need to grow. Laugh the tough moments off and remember to lean on your partner when plans fail.
Future Spending Habits:
While these tips may be a basic start for preparing for parenthood, you can use them to build great spending habits for the future. Your children will quickly outgrow their clothing, toys, swings, and baby items. Keep focused on building up your rainy day fund and planning for your upcoming costs. Park your earnings in a high yield savings account before paying bills or investing each month. While you will pay a little tax on any interest earned, it is incredibly powerful to put your money to work in this type of account while you are busy handling all that being a parent sends your way.
I hope these tips are helpful to those of you preparing for parenthood.
Thank you so much for tuning in and I cannot wait to share more in the next edition of the Parent Digital Duo.
-P.F.
