So you’re thinking about having a baby…or maybe you’re in your final stretch and the little one is arriving in a matter of months.
The fact is:
You are probably wondering if there is something you’ve forgotten in the rush to make the perfect home for the newest addition to your family.
That’s why I am here! To fill you in on all the little details that every mom (and Dad) forgets before the big day.
This is not your standard checklist! Dig in for some tips that will save you time, money and hassle.
DID YOU KNOW?
Your washing machine eats socks? Yep it sure does. Never, ever expect to retain perfect pairs. No matter how vigilant you will have mismatched socks forever!
Saving for College
Did you know there are only 940 Saturdays before your baby turns 18 & ostensibly goes to College or University.
When you think of it that way, you better consider how you are gonna pay that bill starting...yesterday. Oh yeah, did I forget to tell you that you will have to come up with $20 - $50K by then???
Ok, ok, I can hear you shouting at me all the way in San Diego. Who does he think we are, novices? That detail is a no brainer!
Ahhh yes, but I have more tricks up my sleeve!
So, instead of giving you the obvious advice about compound interest and saving when you are young, I’m going to share some tips that will help you sock more money away than you ever thought possible.
529 College Savings Plan
If you want to start a university education fund think about a 529 College savings plan. You can open this savings account in your name before your baby is born and then transfer it when you get your child’s social security number. The earnings on this investment are tax-free and can be used for specified pre-qualified educational purposes.
If you decide to have another baby you can split this account in half to accommodate them.
Coverdell Educational Savings Account
This plan is similar to the 529 College Savings Plan, but has a cap for earnings. If you make less than $220,000 per year you can contribute up to $2,000 per year tax free.
You can open a Coverdell Educational Savings Plan today and transfer it once you get your child's social security number.
It’s like an airline miles program for your kid’s education. You can earn cash back on purchases made, which will be funnelled into an account for your chosen beneficiary.
Hey if you are going to spend the cash anyway, why not get some benefit out of it?
Sounds like a great deal to me!
Child Tax Credits
Over those 940 Saturdays did you know it's going to cost you a whopping $304,480.00 to raise your baby to maturity???
Who knew that you could have purchased that beach house? I understood that our finances had changed, but sheesh!
So while you actually need your baby to born for this tip – don’t forget to take your child tax credit for the year of their birth. This gives you a tax credit of up to $1,000.00 even if they were born later in the year.
If you make more than $110,000 jointly or $75,000 filing solo, this tax credit will not be available to you.
Thinking About Adoption?
If so, you can get a credit for adoption expenses of approximately $13,000.00. This is a great way to recover costs incurred during this process and the cap on income is pretty high - so it's likely you will qualify even if you earn good money.
Knock Out High Interest Debt
According to Nerd Wallet "the average household pays a total of $6,658 in interest per year. This is 9% of the average household income ($75,591)"
I think these figures speak for themselves. If you were to save that figure for 18 years you'd have over 1/3 of what it would cost you to raise that baby!
Now that's something to think about.
Keep Costs Down
There is a lot of temptation to buy, buy, buy when you are expecting a baby.
After all, breast pumps, baby monitors, bedding and cribs all cost a pretty penny.
Thankfully there are showers and parties where friends and family make contributions to your household.
The best advice I can give is don’t take on a huge amount of debt.
One idea that we used when we had the girls was to put our credit cards in ice (yes literally). Freeze them in a block of ice, to provide a “cooling off” period for your decision. It’s a lot of hassle to defrost that ice block!
DID YOU KNOW?
An old wives tale says that when the Father puts on weight during his wife's pregnancy a daughter will be born. Well, in fact a Danish study proved this to be true. Dad's with female children put on more weight!
Tips to Cut Down on the Costs of Having a Baby
In fact if you’ve run up high interest credit cards, try to pay them down before the baby arrives. Nothing is going to get cheaper and trying to maintain debt will cost you a bundle in the long run.
There are so many ways you can avoid breaking the bank when your baby comes.
1. Think thrift stores and second hand furniture and gear. Cribs, dressers, high chairs etc. can all be repurposed. Although our nursery was beautiful when we had the girls, much of it was second hand.
2. Make a list of the baby’s needs and stick to it. There are so many useless things that are peddled when you have a kid. Sit down and pound out the necessities…then meticulously weed out the WANTS. Yes that baby chandelier makes the whole room sparkle, but at $700.00 you could give it a miss.
3. Leave your plastic at home. Yep. Bring cash for things you know you are going to buy. If the credit card is not there, it’s easier to avoid impulsive purchases. See my ice block trick above!
4. Up your plastic payments. Instead of making minimum payments up your monthly payments and create a schedule to be debt free. When the baby arrives and you don’t have credit card payments you’ll be thankful!
Write Up Your Will
There is nothing worse for your beneficiaries than dying intestate. You want to make sure that the people you love are protected when you pass away.
So guess who decides where your money and property goes if you don't have a will?
….and yet a staggering 64% of the American public doesn’t have a will.
Is anyone else thinking ostrich right now?
If so raise your hand!
If you are about to have a baby there is no better time than now to cast in stone what you would like to happen should you die unexpectedly.
Who would you like to take over raising that child? How should money and real estate be divvied up?
Don’t wait a moment longer. Draft a will so that lawyers don’t devour your estate.
DID YOU KNOW?
If you don't pick out a guardian for your child, social service will intervene to find a home. Makes you think doesn't it?
Buy Life Insurance
Sooooo, for obvious reasons this is a personal bug bear of mine and something way too many people neglect. Life insurance is such an important safety net for your family.
I cannot stress this enough.
....and I put my money where my mouth is. I personally have three life insurance policies totalling over $2 million in coverage. I know my family will be taken care of should something happen to me.
The shocking numbers above speak for themselves.
If you are going to give birth to a new life, you an obligation to make sure that child is taken care of with, or without you.
My wife Brenda and I started this blog because we have personally witnessed what a difference life insurance can make in the life of your family, IF the unexpected happens to you. Too often, we think we are too young to die, when, in reality, long life is never guaranteed, and we must prepare for the worst, while enjoying all the good stuff life has to offer!
DID YOU KNOW?
Life insurance falls pretty low in people's minds in terms of financial importance. Number 7 to be exact! With 4 out 10 Americans thinking it's of no use to them at all. Whaaaat? GoFundMe Is not Life Insurance ladies and gentleman.
Purchase Disability Insurance
Did you know there is a 3 in 10 chance that you will sustain a disability that will prevent you from working 90 days or more at some point during your career???
I think most people think that disabilities happen to others. The truth is it's way more prevalent than you want to know.
...did I hear you say "So what? My employer offers disability insurance."?
Hmmmm well stats show that 70% do not. Are you familiar with what your employer offers if you are disabled? Or maybe you are part of the growing numbers of self employed people who don't hold disability insurance at all. If that is the case do you have enough savings to see you through?
Life has a tendency to throw us curve balls. No one “plans” to lose and eye or a limb, but accidents happen that alter your life permanently.
There are so many things that we take for granted each and every day, like eyesight, hearing, walking and talking – but what if that changed one day and you were unable to work?
Disability insurance was founded to diffuse the monetary hit that you would sustain should something like this happen to you.
DID YOU KNOW
Social Security Disability Insurance (SSDI) is VERY unlikely to help you if you're in a bind. Yep. Don't count on it. Payments can take up to two years to receive, and most initial applications are denied.
...oh yeah and did I mention the 5 month waiting period?
Disability insurance pays a portion of your salary for a period of time should you become disabled, unfortunately, it doesn’t tend to rank high on anyone’s priority list. To avoid financial devastation should something unforeseen happen, many financial planners encourage their clients to purchase it.
It’s important that really know what you have in terms of disability protection. Many people think that they can count on the group disability policies offered through their employer.
“First look at what is available through your employer,” said Clarissa R. Hobson, a financial planner in Colorado Springs, Colorado, who acknowledged that the coverage wasn’t cheap. “Some coverage is better than none.”
So if you are lucky enough to have this coverage, be aware that you will typically only be paid out about 60% of your current paycheck. This leaves a 40% deficit. Statistics also show that only 30% of employers offer this protection.
Another misconception is that you can rely on Social Security Disability Insurance. This is a very tough process to go through and it can take up to 2 years to receive your benefits.
That is if you qualify at all and aren’t turned down!
This is not a secure option and is especially dangerous if you are living paycheck to paycheck.
My advice is to speak to an independent life insurance agent and add a rider to your policy to cover disability. It’s the best way to assure that you and your family are covered in case of disability.
Choose Your Health Care Insurance Plan Wisely
One of the best parts of the affordable healthcare act is that health insurance companies must include maternity care in their offerings. Of course, the affordable healthcare act in currently undergoing changes, so you should double check.
Hopefully, gone are the days when you could find yourself completely without coverage. The cost of having a baby is exorbitant. Think $30K - $50K depending on whether or not you have a Caesarian. Wow!
That being said, there is some disagreement amongst states as to EXACTLY what is covered. So it's important to read your policy's fine print to know what benefits you are entitled to receive.
This is not to say that you will not have out of pocket expenses! On average, childbirth copays average $3,400!
Ideally, you want to think about this before you’re expecting so you can choose the plan with the best maternity coverage.
Be sure to inquire what the out-of-pocket costs are to avoid sticker shock later on.
It is also important to remember to add the baby to your plan after its birth.
You are VERY likely to forget this step as this period is one of the most difficult transitions. Hey! You are sleep deprived and just recovering.
DID YOU KNOW
How much you pay to give birth depends greatly on where you live. Truven Health Analytics shows that women in California paid $3,296 - $37,227 for an uncomplicated vaginal delivery and between $8,312 - $71,000 for a C-section!