Financial Planning is Key When Having a Baby

Any life change can be hard on a family budget, even if it is a happy event like the birth of a child. Fortunately, Mother Nature gives us nine months to prepare for parenthood and the sooner we get started, the better. In planning your personal finances for the baby’s arrival, there are several things you can do to ease the transition.

Re-visit the family budget. Your family is changing and so should your spending plan. When creating your new family budget, don’t forget to factor in often overlooked items such as increased healthcare and insurance costs.

Be realistic when shopping for baby. While it is nice to have new things, it may be wise to look for gently used items at thrift stores and consignment shops, since most baby necessities are costly and only used for a short period of time. When it comes time for the baby shower, ask your hostess to let people know of the things that you need, so you don’t end up with 30 adorable outfits and no thermometer.

Plan to make it work at work. Investigate your company’s maternity or paternity policy as soon as possible. Most people have to prepare for an income reduction for at least part of the leave. Because of taxes and child care costs, take time to determine whether or not it is worth it for both parents to go back to work.

• Before seeking any credit, prepare a spending plan, or budget. How much of your monthly income will go toward paying credit card bills? Monthly debt payments should not exceed 20 percent of your monthly take-home pay or monthly allowance.


• Invest time when shopping for credit and know your options. Look for cards with low interest rates, little or no annual fee, and a reasonable “grace period” to allow “free time” before finance charges begin.


• Since different types of credit have different interest rates and terms, use the same amount of time and research shopping for credit as you would a new car or other major purchase.


• Consider the risks involved. What would happen if you defaulted on a loan?