Congratulations, you’re expecting a baby! It is time to celebrate the arrival of a new member in your family. However, amidst the thrill and excitement of buying new clothes and toys for your little bundle of joy and the jitters of your first pregnancy, there are lots of things that require some consideration. Although, given the prospect of bringing new life to your family and the joy of raising a child, it can be hard to focus on the more mundane task of financial planning, its importance is critical.
Apart from of any medical costs (especially the transportation costs for all those visits to the doctor every few weeks), having a child is an expensive prospect. It is a good idea to plan your finances well ahead of starting a family. Who doesn’t want to give their baby the most comfortable upbringing complete with a healthy life and good education? And for this, you need money. Let’s have a look at the various ways in which you can ensure sound and timely planning of your finances to be absolutely ready when your baby finally arrives into this world.
Analyze the anticipated costs
It is advisable to forecast the unexpected expenses in the early months of the pregnancy. You will need a substantial amount for paying off your bills for a variety of medical provisions such as prenatal care, labour, delivery and even post-natal care for the new mom. You will also need to cover for any salary cuts with respect to any unpaid (or reduced salary) maternity leave.
Maintain a journal for expenses
Jotting down your everyday expenditures in a diary is a great way of keeping track of where you are spending a chunk of your income. While you are about to graduate from a couple to a family of three, your salaries are likely to remain the same. Carefully analyzing your major expenses and identifying the areas that you can cut back on will help you spend less on non-essential products and services and save more for the additional member of the family.
Start an RESP
There are several RESP plans available to Canadians that offer your child the security of having affordable post-secondary education when they come of age. You can create a plan that best suits your needs and ability to save. It is important to consider that tuition costs have been steadily rising for the past decade and will likely continue to rise going forward. You want to make sure that even if you are not able to cover 100% of the costs, you will at least be able to cover some of them. Along with available scholarships, university should be an affordable experience when the time comes.
Budget to live on a single salary
With only one of you working for a considerable time after the birth of your child, there will be a sudden drop in the total income of the family. This will not only be hard on your own finances, but also difficult to deal with given the addition of a new member to the family. You must therefore start budgeting in advance and prepare yourself for dealing with the inevitable financial crunch with adequate savings to cover for the increasing costs of your new born baby’s needs. For instance, you can try to start living on a single salary for a few months before the baby actually arrives to add up onto your seed money and also get a taste of what will ensue.
Pay attention to your emergency fund
With a baby on the way, it’s high time you emerged from within the blissful ignorance of your carefree lifestyle and start saving for the ‘rainy day’. Young children are prone to getting into trivial accidents every once in a while. You must therefore start building up on your private emergency fund fairly early in the pregnancy, to cover for all your baby’s unexpected toothaches and knee scrapes without having to pass on the burden to your regular monthly bill payments.
A little planning and organizing will go a long way in ensuring a happy and healthy present and future for your baby.