My husband and I are expecting our first baby in September, and while we're very excited about welcoming our son, we're also facing some big questions about financial issues that come along with a new child.
Babies don't just mean you'll be getting less sleep -- they also can shake up your financial life in major ways as you figure out how to pay for the costs of bringing them into the world and caring for them. The last thing new parents need is to try to make tough financial choices while caring for a newborn, so taking some key financial steps in advance is very important. Here are three things you should put on your to-do list as soon as your pregnancy test comes back positive.
1. Check your coverage
Your new baby will start costing you a lot of cash well before making an entrance into the world. There are lots of doctor appointments to check on the progress of the pregnancy. These visits usually aren't just routine exams, either -- there's blood work and ultrasounds to check on the baby's health and to make sure momma is holding up OK.
To ensure you can afford the very best prenatal care, find out exactly what your insurance will cover. While Obamacare mandates every policy provide at least some coverage for maternity care, this doesn't mean your coverage is necessarily comprehensive or will pay for all the testing you want. If you don't have comprehensive coverage, you'll have to save to pay for deductibles and coinsurance costs. Or, if open enrollment is coming up, you may wish to switch to a different policy that provides better maternity care.
You'll also want to confirm that the doctor or midwife you see is in network and that they participate with an in-network hospital if you're planning on having your baby there. Plus, since you'll want to ensure your child is covered from day one, you should call your insurer and find out what the process is for adding your newborn to your policy. It's definitely helpful to know ahead and not try to figure it out once your baby has arrived and is demanding your attention.
2. Learn the rules for family leave
Paid leave is not a given in the United States, and there's a very real chance neither parent will have much if any paid time off to be home with the baby. Find out your company's policy and plan accordingly. If you don't have paid time off, start saving up paid vacation days if you have them.
You can also look into whether your company is covered by the Family and Medical Leave Act. Larger employers -- typically those with 50 employers or more -- have to give you up to 12 weeks of unpaid leave when you have a baby if you want it, without your job being at risk. But you're eligible only if you've worked for the employer for at least 12 months before taking leave and meet minimum hour requirements. Some states require companies to provide unpaid leave even in other circumstances; check your state's laws or ask HR at your job.
If you have to take unpaid time off, you'll need to make sure you can afford that. So start saving ASAP to cover the weeks or months when you don't plan to work. And it's not just moms who may want to take time off to bond with their babies -- dads should look into leave policies, too. Dad may need time off if mom has a difficult recovery and can't take care of the baby right away, so look into options in advance in case paternity leave isn't optional.
3. Plan for life post-baby
Unless one parent plans to stay home forever, you should look into child care costs well before your baby is born, so you can start reworking your budget. It can also take time to find affordable child care or to apply for benefits to help you pay for care if your salary doesn't stretch far enough. And in some cities, affordable day care providers have waiting lists, so you may need to sign your baby up even before birth to get a coveted slot with the provider of your choice.
When you do the math, you may also discover that you can't afford child care and one parent may have no choice but to stay home. If so, the time to make dramatic lifestyle changes is before your baby comes, to ensure you're able to live on one income. This may mean you need to downsize to a smaller place, get a cheaper car, or otherwise find big ways to cut expenses and survive on one salary.
Start preparing for baby today
By planning for how you'll afford big costs associated with a new baby, you can ensure that your child doesn't send you into a whole lot of debt. Babies should change your life in positive ways, not cause financial disaster -- so start planning today to be ready for that bundle of joy.