Children are by far one of the largest investments you’ll ever make in your life. Adjusting for inflation, it’ll cost parents with children who were born in 2012 an average of $301,970 to care for them from birth through the age of 18. That dollar amount can seem pretty daunting for new and expectant moms and dads.
Here’s a brief guide to financial planning for those brave souls who are about to embark on the adventure of their lives.
Don’t Overlook Life Insurance
Image via Flickr by ECohen
Many young people don’t appreciate the importance of purchasing life insurance. Many take their health for granted, and don’t care to slow down and consider what would happen if tragedy were to strike. When you become a parent, you must buckle down and set up provisions in the event that tragedy strikes. Since financial planning isn’t always a strong point for young parents, look for resources and support to help you make informed decisions about your family’s future.
Life insurance is generally very affordable, but when it comes to expectant moms, it becomes more costly the longer you wait to choose a policy. With factors like gestational diabetes and other complications, it’s best to set up a policy as early in the pregnancy as possible. Purchase a policy that’ll protect your family’s finances in the event of any complications during your pregnancy and delivery. Continue to do so long after you’re done giving birth to your child.
Weigh Childcare Pros and Cons
Feeling financially overwhelmed is common for parents after they’ve researched the cost of childcare. For some, childcare fees can eat up a significant portion of income. Keep that in mind and decide how important it is for both parents to return to work. It’s for this reason that, when faced with the decision of returning to work only to spend an outrageous 75 percent of their income on childcare, many moms opt to stay home.
Childcare costs vary across regions, and certain professions are more accommodating than others. With that in mind, take an honest inventory of your support network. Do you have close family members who are able and willing to help out in the childcare department? Are grandma and grandpa available for bonding time with your bundle of joy? The support and assistance of family and friends might help you significantly reduce the amount you’ll need to depend on traditional childcare.
Consider Higher Education Costs
The cost of higher education has increased exponentially in recent years, and the upward trend is projected to continue in the years to come. Keep this in mind as you map your long-term financial plans. Engage in some meaningful research and consult the many books to educate you on investment that are out there, and focus on strategies that’ll work best for your particular situation.
Planning for your child’s future education expenses increases the likelihood that they’ll be able to pursue their dreams without drowning in crippling debt.
Set Up an Emergency Fund
Kids are unpredictable. Expect the unexpected when it comes to financing motherhood. Utilizing useful and reliable resources can help make saving for specific milestones, or just a rainy day easier. The best way to take control of your finances and not let the unexpected expenses that come along with parenthood break the bank.
Find Ways to Cut Costs
You might be surprised to find how much money you can save by simply thinking outside the norm and taking matters into your own hands. Baby food and formula are some of the biggest expenses parents tackle. Combat this by preparing to breastfeed as early and as long as possible, foregoing formula altogether.
Additionally, a small initial investment in a decent food processor and glass containers are the making of an incredibly healthy and cost-effective homemade baby food operation. Disposable diapers are any environmentalist’s worst nightmare. Not only are the chemicals in them terrible for the environment and your baby, they’re outrageously expensive too. The cloth diaper movement is gaining momentum; more and more new moms are finding them to be much more convenient to use than one might think.
This list merely scratches the surface of financial planning for new mothers. What’s your biggest concern about being an expectant or new mommy? Please share your thoughts with us in the comments below.