A Brief Guide To Managing Your Finances Around A New Baby

The arrival of a new baby is something worth celebrating. Your life is about to change in the best way possible and there are plenty of good times on the horizon. Having a new baby does come with some downsides, most of which can be negated with careful preparation.

One aspect of your life that is definitely going to change is your financial standing. You have a new life to care for now, and that costs money. The average cost of a baby is around $1,500 per month. Again, preparing yourself properly can help in this situation, so read on to find out how to manage your finances around a new baby.

Take Note Of What You Earn

The first step in managing your finances is finding out your starting position. Your monthly salary is already covering your monthly bills, but can it stretch any further? It is important that you sit down with your partner and be realistic with what you can afford going ahead.

Some couples will be fortunate enough that they already have enough extra income to accommodate a new baby, while others will need to start to make changes. These changes do not have to be permanent; however, they can affect how you view your financial standing in the future.

Sort Out Leave

A new baby is going to require at least one parent to stay home from work for a bit. Deciding which parent this is will largely depend on the maternity/paternity policy of the company you work for.

Every business should have a plan in place for when their staff takes pregnancy leave. It is probably wise to brush yourself up on these policies as you make your financial plan. The payments that you receive may cover you for a while, so you can factor this into your financial management plan.

Manage Your Debts

Debt can hang over your head and make discussing your finances difficult. These payments may very well be taking up a large chunk of your monthly income, and you would probably prefer to put this money toward your baby.

Paying off debt in one go is almost impossible, especially when you have another mouth to feed. That is why you should aim to manage your debts instead. Believe it or not, there are companies out there that want to help. A company like Tally can advise you about the perks of changing your credit card due date. These perks include arranging a better payment date, spreading out your payments, and making the re-payment process more manageable as a whole. Every little helps when it comes to paying off debt, so take the advice that’s out there to make debt a thing of the past.

Start A Savings Pot

Life with a baby is full of everyday expenses that you cannot account for. Your baby is going to go through nappies like you wouldn’t believe, and you may find that you forgot one crucial piece of equipment when the baby actually arrives.

Having a cushion to fall on in these instances can really benefit you. Every payment you make has been calculated to fit within your monthly budget, and anything extras may disrupt this plan. That is why you should put some money aside whenever possible. It doesn’t have to be much as it all adds up in the end. You have nine months to prepare a savings pot, and you will be grateful that you did when the time comes.

Look At Childcare Costs

Once your maternity/paternity cover ends you will need to go back to work and find childcare for your child. If you can arrange a work pattern with enough overlap to reduce these costs that’s great, but the average cost for full-time childcare is around $600 per week. You may be able to mitigate these costs by arranging care with friends and family, but if not this is a huge expense to think about.

Only by being realistic and discussing your options early on can you prepare your bank account for this lofty cost. There are some ways you can avoid childcare costs. For example, if one of you isn’t bringing in that much from your job you may as well stay home and look after the child until they start school at least. The cost of regular childcare comes as a surprise for most new parents, so try to get everything ready to prepare yourself financially.

Conclusion

You may not want to spend time discussing finances during this blissful period, but it is far more beneficial to do so before the baby comes than after. The important thing to remember is not to worry too much about the costs of having a new baby. Every parent goes through this struggle at some point, and they are all fine. Chances are you and your partner will be too.