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Financial Planning When Having Babies – Everything You Need to Prepare

Let me tell straight away – having a baby does not come cheap.

Your finances will, without a doubt, go up and you're going to have to be extra careful when it comes to spending your hard earned money. That said, there’s no need to panic!

Careful financial planning will ensure that you and your partner can handle the expenses to the best of your ability.

Start by making a list of all the things you’ll have to buy for the baby. You will have to buy a huge amount of baby products from baby wipes to a convertible crib for the child to sleep in.

Jot down all the things you think are essential and then go through them one by one to see which are absolutely necessary and which can be replaced with cheaper options. Keep the discussion between you and your partner open and honest; having a tight budget is nothing to be worried about if you're willing to tackle it together!

Here are quick tips to keep your pregnancy well within your budget.

Check Your Maternity/Paternity Options

Every employer has a different code for maternity and paternity leave. It changes from state to state in the United States; check in with your boss well in advance to see what your options are.

You may get several weeks off work with a full paycheck or half the amount; you may have to throw together some vacation time or sick time if you want to supplement this income with more paid leave.

Talk to your boss early on during your pregnancy to avoid difficulties later. Also find out the health insurance options; some employers may provide added health benefits you can avail.

Look into all this well in advance so that you’re well prepared for when the baby comes.

Talk with your partner about your joint options because once you know the amount that you will receive during pregnancy and after, you will be in a better position to make any decisions needed to be made about the upbringing of the baby and who will take the initiative during working hours.

Recheck Your Insurance Options

Skim through your health insurance plans and check in with your insurance provider to see if there are better options. Sometimes, there may be other plans that cover a bigger array of items from hospital bills to diaper bills.

If you find something better, switch over right away to help you keep your finances in balance. I’ve spoken more about this in the following section.

Also sign up for disability. If your boss doesn’t provide you with it, get it independently. Remember though; check the fine print to make sure that pregnancy and all the potential complications it comes with are covered.

It’s a good idea to go in for life insurance as well. Make sure both partners are covered; if you find that money is tight, choose the 20 or 30-year term life insurance, which will cover the time you need it the most, for a considerably lesser amount than the universal or variable coverage options.

Most parents find it difficult to opt for life insurance; you are afraid that printing out forms that speak of your death might make it a very real possibility. But do not – ever – put this off; choose a plan that allows you to pay your premiums according to your budget.

This way, you manage to give yourself some peace of mind as to your child’s welfare even if you are gone. You have the option of choosing between term insurance and whole life insurance; generally, it makes more sense to go in for term insurance in case of a family that is still growing.

But both have advantages, so do your research and then pick the one that suits your situation the best.

Another issue you have to face is to make out a will. If you do not leave behind a will for your child, the guardianship will transfer to the state, as will the ownership of your assets. It is very possible that your kid will end up in the foster system and you have heard all the horror stories about the children that grow up in such situations!

That’s not to say that your kid will have that kind of a horrid foster parent – to be on the safe side, just draw up a will. Carefully select the person you want to take custody of your child; make sure they love the kid as much as you do and are willing to take up the responsibility of child rearing.

A lot of parents put this off because of the emotional upheaval involved in making a will – for the sake of that precious baby you are going to bring home, go and make out a will immediately.

When it comes to your tax status, having a child can help your finances! Make sure you get your child a Social Security number soon after you give birth; with it, you can claim a dependant on your income tax form.

Also, having children means that you are now possibly eligible for child credit and maybe even childcare credit. Consult your lawyer and see what needs to be done to get the ball rolling on these procedures.

Handling Your Health Insurance

As I mentioned previously, your health insurance is something you will need to look into when you get pregnant. If your employer is offering you a good health insurance plan, check to see if they will be willing to add your baby’s health as well.

Most companies have special plans and policies for kids; check to see which medical expenses of the baby the plan covers and which expenses you will have to bear yourself.

A good health insurance plan tends to cover a whole gamut of items for expecting mothers – from prenatal care to pediatric care, you generally have very little to worry about.

But there is one slight problem – if you choose to stay at home after giving birth or quit your job in favor of taking a break until your kid is old enough to look out for himself/herself, then you may lose your employer offered health insurance.

This is why it is a good idea to start asking questions and planning well in advance; ideally, begin working out your health insurance details when you decide to have a child itself.

As you’re trying for a baby, even before you are officially pregnant, look into the healthcare options and work out your insurance plan with your employer so that even if you quit your job, your insurance remains intact.

Check to see what are the items your health insurance will or will not cover.

Here is a list of quick questions you can ask your employer or your health insurer even before you have your first appointment with your obstetrician.

  • Does your plan cover prenatal and maternity care? Ideally, it should; federal law requires that any person who employs 15 or more employees allow for a health insurance plan that covers any and all medical bills related to pregnancy.
  • Do you need to get preauthorization for any of the prenatal or maternity care you will be undergoing?
  • Do you have to get in touch with your insurance company when you are admitted into the hospital for delivery? Check this answer carefully – some companies may financially penalize if you do not contact them soon after you are admitted into the hospital.
  • Will your general physician have to give you a referral to meet with an obstetrician? This is a rare clause in many insurance plans, but sometimes companies do insist on referral to specialists in case complications arise at the last minute.
  • What is the coverage you will receive for prenatal tests like the ultrasounds?
  • How much your stay in the hospital does the insurance cover? In case you are medically required to stay longer than planned, will insurance be available?
  • Is there an annual limit of reimbursement? This is, again, something you should check carefully; in case such a limit does exist, then you will not be paid for healthcare costs beyond that limit.
  • Take note of the fact that the clause states healthcare and not pregnancy in specific; if you have already claimed insurance for a previous illness or medical issue, you may not be able to avail of insurance for pregnancy related bills. Be very careful in this case.

These are the questions you try to answer that are related to insurance coverage for you. 

Here is a list of things you need to ask when it comes to coverage for your baby:

  • First and foremost, how do you go about adding your baby to your insurance plan?
  • Will this plan cover the newborn’s stay in the hospital? Generally, hospitals tend to bill the infant separately from the parents; in fact, your baby’s first official piece of paper is probably going to be the hospital bill. Health insurance benefits typically give coverage to the baby if you enroll your child, as your dependent within 30 days of their birth, so be very prompt in doing this!
  • Is the plan going to cover your child’s stay in the neonatal intensive care unit (NICU) in case of emergency?
  • Does the plan extend to beyond just the birth of your child? Are you given coverage for pediatrician appointments, immunizations and vaccinations and the like?

These are questions that should get you started on the right track; remember, this is just where you begin.

Health insurance is a lot more complicated, so consult experienced lawyers, friends and other parents who have been through all of it before. Don’t be afraid to ask questions and always look out for better options.

Also look into insurance coverage in case of losing your job or quitting. Generally, if you change jobs, it means you will have to give up the health benefits your former employer was offering and accept the new plan that your new boss is giving you.

This would not be such a problem usually; however, as a pregnant woman, you need to be very careful when it comes to health insurance. One major reason to be extremely cautious right now is this – a few employers insist on having a probationary or waiting period.

They will want to wait a few months to see how you work out before they decide that you are eligible for health insurance coverage. If you end up giving birth during this waiting period, then you will have to pay these bills out of your own pocket, which can cause your wallet to cry.

And even if your new employer is willing to accommodate you and give you your coverage right away, look through the plan properly.

The terms and conditions for your new plan may be a lot different from your old one; in fact, you may even be required to change physicians or hospitals during your pregnancy, which is, suffice to say, not an easy option.

The smart thing to do would be to continue with your old health insurance plan, even if you leave the old company.

A special federal law named COBRA has been instituted such any employer who has 20 or more employees has to allow health insurance coverage for up to thirty six months after the employee has left the company.

Check to see if you are applicable for this option or if you have any other similar choices that will allow you to maintain the same health insurance plan through the full duration of your pregnancy.

The problem with COBRA coverage is that it tends to be a bit more expensive than other insurance premiums; but the added expense is going to be well worth it if you find out that your new employer is imposing a waiting period or does not offer as good coverage as your old boss.

COBRA is also helpful if you are laid off in the middle of your pregnancy.

Now remember, before you make any hard decision, consult an expert and speak to experienced parents about these issues.

The law is a tricky thing; don’t try to navigate it on your own!

Get help and don’t be afraid to ask questions – the more you learn, the better covered you will be and the better prepared you will be for your kid’s entry into the world!

Make a Needs VS Wants List

Remember that list I mentioned earlier?  Go back to it. This time, check off the things you need as opposed to the things you want. You can go nuts with your first list – add everything you want to buy for your baby, from Bag Nation Diaper Bag to Mickey Mouse swaddle blankets!

The second time, though, start cutting down to all the things you’re going to only need. When you have the two extremes, you can begin to organize your budget.

You’ll find out that you don’t have to go with the barest minimum if you can plan carefully – you will still be able to buy that cute, costly shirt for your child if you can cut down on the cost on something else!

Advertisements and magazines will convince you that you need absolutely everything in the market. You actually don’t – you can, in fact, make do with what you have at home!

For starters, if you really cannot afford to build a nursery, don’t panic! Go with having a really good crib that you can put within your own bedroom until you have saved up enough to get the nursery into shape.

That way, you can even cut down on the cost of the wireless baby monitor!

Here’s a quick list of things you can replace with cheaper items:

Changing Pads & Changing Table – As wonderful as having a table specifically to change your baby’s clothes and diapers sounds; it is not an essential element to good parenting.

You can simply use the bed or a nice, soft towel to place your baby on before you change them.

Fancy Feeding Bottles – There are all kinds of bottles for your child. Look through the Internet, and you will be swamped by the number of options you have, from curved to straight, from glass to plastic and what not.

Really though, any bottle will do, as long as it is BPA (bisphenol A) free and it does not leak. Glass bottles are a wonderful option – you can simply wash them out and reuse them.

Plastic can also be used that way, but I wouldn’t recommend it – glass is more environment friendly, and plastic has been known to cause problems like cancer if used too regularly. 

Baby Clothes – As tempting as it is to buy your baby a whole closet full of cute baby clothes, it is a huge expense you can avoid when money is tight. Kids outgrow clothes like nobody’s business, so if you want to buy new clothes every month, you're going end up going broke.

Talk to some of the new mothers around you; chances are, they will have boxes full of used clothes their own kids outgrew very fast in good, working conditions.

Buy used kid’s clothes to keep within your budget; it’ll help maintain your costs to a manageable level. That’s not to say that you can't have a couple of really cool and cute outfits for your child – just don’t go crazy over them.

In the clothing department, the first size clothing always looks temptingly cute. Avoid buying too many first size baby outfits because it’s usually when a baby gets to size 2-3 that you start to run short on new things for baby to wear.

The baby will grow very quickly so all those first sized clothing items will be wasted.

Diapers – these are, arguably, the most important baby product you will ever need. If money is tight, it may be a good idea to switch to cloth diapers – you can wash and reuse them, and thus, save yourself the cost of buying new ones.

A lot of people find this very hard to handle, though – disposable diapers are easier since you can just throw them away after they're used. Start stocking up when you're pregnant, in that case.

For instance, buy a two or three packs a month and spread the purchase over the eight months so that it doesn’t pinch your expenses later and you are well prepared for when the baby arrives.

Look for deals when you walk into baby stores too so that you can keep to your budget. If people ask what to buy you, let them know about your diaper choice because every single pack bought for you saves you money for nicer things that you can choose yourself.

Baby Formula – Barring doctor’s advice, it is a much better idea to go in for breastfeeding instead of formula. Not only does the natural mother’s milk have more health benefits, it is absolutely free, saving you money on buying formula and even feeding bottles.

However, remember though, that it is not easy. It can be rough and painful, and you may even develop infections if you're not prepared. Consult your doctor and choose the option that suits both you and your financial budget.

Talk about any problems that you have with feeding when you are in the hospital, as you may need to be shown how to maximize the benefit of natural milk supply for the baby as opposed to using formula.

Make sure that you always follow instructions on temperature and preparation of formula, so read the instructions on cans and make sure you know what you are doing.

Handling Your Hospital Bills

If you’re financial condition is tight and you are worried about paying the bills, it is a very good idea to approach your doctor and the hospital right away.

Even before you check in for labor, make sure you let them know what your condition is and see if there are options available to make your stay cheaper.

Sometimes hospitals tend to give you the full labor package and you don’t even realize how much extra you are paying for.

See if you can get a list of all the things they normally charge for; you may be able to cut down on a few of those items to save that extra penny.

Also check to see if there is an early check out option; as long as there are no complications, you may as well get back home and rest instead of having to pay for the extra one day of observation.

But please consult with your doctor before you do so – you don’t want to come running back because you were not careful enough.

Do remember to use the period when you are in the hospital to get as much advice as you can get so that when you go home with your new baby, you are able to cope well with all areas of baby care.

Reuse Old Items and Wait for The Baby Shower

If you have the bed crib your parents used for you, or a car seat a friend no longer needs, pull it out for your baby!

Don’t be ashamed to reuse things – it’s a great option for the environment and it saves a huge amount of money you would have otherwise spent.

As with the clothes, toys can also be reused and recycled; babies don’t really play much with anything for the first few months.

They prefer little things that make sound or are colorful, so you can even go with homemade toys that you can put together with odds and ends lying around the house until you save up enough to buy your baby bigger playthings.

And if you know your friends are throwing you that baby shower, then wait for the gifts to pour in before you go nuts at a baby store!

Baby showers often mean more clothes and toys and baby products than you know what to do with, so don’t empty your wallet just yet.

Once you do get the gifts, cross reference it with the lost you have made and see what else if left that has to be bought and buy only those items.

It may sound clinical and it may even sound like you are taking advantage of your friends, but it is a practical way of doing things that keeps things going for you, so don’t be afraid of it!

Like with any other budget, financial planning for pregnancy and childbirth just takes time and effort.

It can be done as long as you don’t panic about all the things you need to buy and how little you have. Remember, you have close to eight months to get things in order – so get started right away!

Parents will also be glad to help when you are having a baby, but don’t let them take over. If they want to help, by all means encourage it, but remember it’s your main event, not theirs.

You may have sisters who have had babies and who may be able to give you items that they have stored away for the next baby that never actually happened.

Be glad of their help and advice because this can really help you financially to get through the whole process smoothly.

There are loads of sales as well where you can get the clothing that goes close to the baby’s skin, such as vests and you need a good supply of these in all the different sizes because babies throw up and need changing so regularly.

Bibs are handy as well, so when you do your shop, remember to look beyond the pretty dresses or neat boys clothing and buy the practical things.

Baby grows are very good investments because they are so useful on a day to day basis, so invest in plenty of these, so that you have something to change baby into for everyday home use.

These are particularly good for a child who is just learning to crawl. Although the money side of things may look worrying, you will get through it and you will manage.