Sleep deprivation, anxiety, and the amazing joy of unconditional love – it may be impossible to really prepare for the emotional roller coaster ride of becoming a new parent. But it is possible to prepare financially for the monetary challenges of parenthood.
The cost of raising a child has increased dramatically in the last decade. National figures estimate the average middle-income family will spend more than $300,000 to raise a child from infancy through age 18. And that does not include college expenses. Many families will spend nearly $10,000 during the first year of a baby’s life.
When it comes to financial preparation, from maternity leave to life insurance, there are many things you can do to financially prepare your family for new additions.
Look into what your employer offers in maternity or paternity leave. Parents who have worked at least one year for a company with 50 or more employees are entitled to up to 12 weeks of unpaid time off, as mandated by the Family and Medical Leave Act. You’re also guaranteed a job at the end of your leave.
The cost of child care is often the highest expense for families. If the cost of day care will exceed the bring-home from a second salary, consider one parent staying home or working on a part-time basis. Some couples are lucky enough to have parents who are willing to watch their children either on a full- or part-time basis. Other families and friends share child care resources to help keep costs manageable.
Revisit the family budget and factor in such items as increased health care and life insurance costs when the baby arrives. Examine other areas of your budget that you can trim in order to put enough aside for the increased costs as well as other monthly expenses. Consider hiring a financial planner to help you make the most informed decisions.
If you are going to buy a home before having children, consider buying one that’s smaller than what you had in mind. The money saved in mortgage and tax bills each month may help make a big difference.
Don’t go without life insurance. If something were to happen to you, would your child or children be financially secure in your absence? Taking out a life insurance policy could save your family from the burden of scrambling to financially cover your loss. Your family can use the payout not only to cover final expenses, but to make payments on a car loan or mortgage.
Don’t let the assumed high cost of insurance premiums sway you from investigating. Affordable options exist in the forms of level term or yearly-renewable term life insurance. You can work with an insurance professional; like those at The Savings Bank Life Insurance Company of Mass. (sbli.com) to find the policy that best suits the needs of your family.
In today’s economy, it’s important to be as financially prepared as possible for the cost of raising children, and every little bit helps. Follow these suggestions or use them as a creative springboard to think up other ways to financially prepare for expanding your family.