When you’re caring for a newborn, it can be hard enough to carve out time to shower, let alone stay on top of money tasks. In the fog of sleep deprivation, you may miss a bill payment or impulse-buy random things online to help with infant care. Suddenly, your credit scores are down and your budget is stretched.
Planning for the baby itself — the name ideas, the nursery themes — is certainly more adorable than developing a system to make sure you remember to open the mail, but the last thing you’ll want to do is leave money management up to chance when your baby arrives. Here are ways to start financially nesting.
Knock out important tasks
Take advantage of the pre-baby months to make some big decisions, including:
— HEALTH INSURANCE FOR THE BABY: Giving birth or adopting a child is considered a “qualifying life event” as far as health insurance coverage goes. That means you won’t have to wait for open enrollment to add your child to your plan, but you’ll have only a limited amount of time — about one or two months — after the birth or adoption to do so. Check your insurance plan’s rules to know what your deadline would be. If you and your partner have separate plans, compare costs and decide who will take the baby on as a dependent.
ESTATE PLANNING: Talk to an estate attorney about drafting a will, selecting a power of attorney and health care proxy, and establishing a trust for your child if appropriate for your situation. “If something were to happen to one of you or both of you at the same time, it would just create a myriad of problems for your child,” says Paul Sydlansky, founder and senior adviser at Lake Road Advisors in Corning, New York.
— LIFE INSURANCE: A life insurance policy can provide vital funding for your family if something were to happen to you, your partner or both of you.
Get your budget baby-ready
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From smaller ongoing purchases like diapers and formula to massive costs like child care, those baby expenses are going to add up. If you’re taking unpaid parental leave or one parent is leaving their job to handle caretaking full time, the money coming in is going to change dramatically.
Start by identifying cuts you can make or bills you can renegotiate to bring down costs. If you have credit card debt and there’s room in your budget to pay it down aggressively, that can free up more money for necessities later. Begin to price out expected ongoing baby expenses, like the monthly cost of day care, so you can get a general sense of how your spending will change.
Next, automate bill payments for recurring costs, like credit cards, utilities and mortgage payments. If you rent your home and normally mail a check to your landlord, use your bank’s bill-pay feature so it’ll send checks on your behalf. Set up whatever you can in advance so these services will continue without interruption and late fees.
Expect the unexpected
Don’t neglect to make room in your budget for unexpected costs.
Emily Rassam, a senior financial planner at Archer Investment Management in Charlotte, North Carolina, found herself spending more on self-care than she planned. “My interest level in grocery shopping and cooking plummeted during pregnancy,” she says. That meant more of her food budget went toward restaurants and takeout.
Rassam also recommends confirming child-birth expenses with your insurance company in advance. She learned, for example, that the hospital she planned to deliver at was in her insurance network but the anesthesiologist wasn’t. In that situation, getting an epidural would cost more than anticipated.
Tap into your village
Your loved ones aren’t just great sources of hand-me-downs, advice and free babysitting. They can also help with financial tasks, whether that’s checking in with you about your money goals or even reminding you of payment due dates.
Lori Gross, a financial and investment adviser at Outlook Financial Center in Troy, Ohio, says neighbors have the same deadlines for costs like property taxes and utilities, so ask them to text a reminder when they pay their bill so you don’t forget.
“Family and friends are very good about helping out with those things, but a lot of parents hesitate to ask for help,” Gross says. “They don’t think they’re going to need it.”