Checklist: 10 Financial must-dos to prepare for a new baby

by - September 15, 2016

Adding a new member to your family is exciting and it also comes with a lengthy list of responsibilities. The best way to do is to not do everything all at once. When you prioritise and make sure you do the important items on your financial to-do list first, then you won't feel so overwhelmed.
The most important thing you can do to financially prepare for baby is to think ahead as much as you can. Ask yourself what your baby really needs – and what you can sacrifice – and then create a plan that puts saving for baby first.

Here are 10 Financial must-dos to prepare for a new baby

Check your budget: We all know that it's expensive to be a parent! By reviewing your budget before you’re even pregnant can be a smart financial move. Make sure you  pay attention to where you may need to spend more now in order to accommodate your baby later—like moving to a bigger home—and then create a plan that’s designed to help you afford it.

Health insurance. If you don't have one please get one. Having a baby requires having quality medical care. Some of your options may not cost a lot, but it’s always best to know what they are and prepare the best you can.

Daycare:  Like most working parents, you might not be able to stay at home and raise the baby after giving birth. You might to place your child into daycare.  Child care will be one of your biggest expenses if you or your partner return to work. That is why you need to calculate the cost of that service into your budget. Depending on where you take them, their prices range from R1000+.

Write a will: As parents you should create a document spelling out how your estate should be handled. The will may also include or reference legal guardianship and powers of attorney.

An emergency fund: Kids are expensive and generally need a lot of things.  You should put aside money from each paycheck into a savings account with the goal of having sufficient funds to cover living expenses for six months. Having a little savings cushion can also make bringing your baby home a simpler, less stressful experience.

Life Insurance: If you’ve been childless for some time and have enough savings to cover your final expenses, you probably haven’t given life insurance that much thought. But all that should change once you bring a new life into this world. Now that you have a dependent, you need enough life insurance to make sure your child will be taken care of if anything should happen to you. 
Pick a guardian: Choose a family member or close friend who is willing and financially able to care for your child, should you or the other parent pass away or become incapacitated before your child turns 18. 

Adjust your beneficiaries. Assuming you already have life insurance for yourself or the main breadwinner in your household — and if you don’t, you should — you may want to add your child as a beneficiary.

Open a savings account in the baby’s name: Choose a no-fee, no-minimum balance, online savings account. You can link the savings account to your checking for automatic withdrawals.

Save for your child's education. College is costly, but you can make it more manageable by starting to save early. If you think through how much you'll plan to contribute to a child's education and how much you can realistically save, that can help guide decision making. If you can save a small amount each year but start early, you will be in a much, much better position than almost everyone else.
What financial steps did you take to prepare for parenthood? What do you wish you would have done differently?

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