Are You Financially Prepared for a Baby?
Having a baby can be one of the most rewarding experiences, but it’s definitely hard work. Building a sound financial framework involves several steps such as eliminating debt and creating a budget. These steps may be intimidating at first, especially when added to the mix of other necessary preparations. I have put together six savings and budgeting tips to help you get ready for one of the most exciting moments of your life:
Create a budget: The first step is to calculate the expenses you will have once your baby is born. When calculating your budget don’t forget to add child care, medical costs, diapers, food, clothes and furniture. The addition of all these expenses will give you an idea of how much money you will need once your baby arrives. The next step is to subtract all these expenses from your annual income to evaluate the amount of money available for baby expenses.
Breastfeed: Breastfeeding not only will be beneficial for your child’s health, but it will save money on the cost of formula. Also, in the long run breastfeeding will save you money on medical bills, as babies who are breastfed are less likely to have colds, allergies and constipation.
Check garage sales: With the arrival of the newborn, parents receive tons of clothes for the baby that are quickly outgrown. At garage sales you can find outfits that look like new for a fraction of the original price. You can also find furniture in very good condition for pennies on the dollar.
Reduce debt: You can’t embark on parenthood without first reducing debt. Design a payment plan to reduce debt before your baby arrives. If you are having trouble managing debt, seek help! There are several credit counseling agencies that can help you take control of your debt.
Ask family members for help: One of the biggest expenses is child care costs. Hiring a babysitter or taking your baby to a day care center can cost about $300-$400 a week, which can add up to $20,000 a year! If day care costs exceed or equal your salary, it’s better for you to stay home with the baby. Also, you can always reduce day care costs by asking your family for help. Maybe your parents and siblings can take turns to watch your baby two or three times a week or in the weekends.This could potentially cut day care expenses by half.
Take advantage of deductions: You can deduct up to 35 percent of child care expenses depending on your income. Check with an accountant before filing your taxes to learn what deductions you can claim.