Welcoming a child into your life is an exciting time. There's so much to look forward to and much to consider. When preparing for a baby, what should you budget for? And what pre-baby financial planning steps should you take to ensure that your growing family is set up for success?
Start with your essential costs
Common pre-baby financial expenses may include hospital and doctor visits, fertility treatments and adoption fees. When your child arrives, there are plenty of other costs to factor in, such as baby food, diapers and a stroller, to name a few.
Keep your costs manageable by creating a budget for all your important items and planning for unforeseen extras, such as needing a larger vehicle.
Consider your childcare options
- Will your child go to day care or stay at home with a parent or relative?
- If both parents want to return to work, full-time childcare can be a big expense, and costs can vary widely based on your family’s needs and where you live. One parent may need to cut back on work hours or leave his or her job.
- Parents who keep working may be eligible for programs such as the Child and Dependent Care Credit, a federal tax benefit that helps families manage childcare expenses.
Establish some financial security
In addition to the costs to prepare for your new baby, you’ll want to think about life and disability insurance to help protect your family if something should happen to you or your partner.
And longer term, opening a tax-advantaged education savings plan allows you to put aside money for your child’s future education expenses.
Balancing saving for your child’s college with saving for your retirement can be a challenge. Consider how you’ll maximize your savings opportunities, such as taking advantage of 401(k) employer matches or supplementing your retirement savings with either a Roth or a traditional IRA.
Growing your family is a big financial milestone. Your Edward Jones financial advisor can help you with your budgeting needs today and your plans for the future.