11 Financial To-Do's for Expecting Moms
OMG, baby on board
Yay, you’re preggo! Even though you’re clear on the basics of what happens next (ultrasound pics, adorable onesies, nursery prep), you’re feeling a little fuzzy when it comes to the financial to-do’s before and after baby arrives. Here, 11 things you need to take care of. Don’t worry, you got this.
DRAFT A PRE-BABY BUDGET
It’s tough not to go gaga on all the cute stuff, but you need to map out a budget for the practical things--out-of-pocket medical costs, maternity clothes, a stroller--that are going to come up over the course of the next nine months. Sure, you can throw wish-list items on your registry, but getting a grip on the big (and little) costs early on gives you and your baby daddy a chance to get on the same page about what you want versus what you can afford--and adjust your spending accordingly.
AND A POST-DELIVERY BUDGET, TOO
Whoa, disposable diapers can set you back close to $1,000 in the first year. And let’s not forget about food, clothing and child care. Good thing there are tons of online calculators (like this one) to help you anticipate the first 12 months of baby costs.
CONTACT YOUR HEALTH INSURANCE
Your gyno just confirmed what you already knew: It’s real. Get on the phone ASAP with your health-care provider and have them walk you through the total costs (prenatal care, labor and delivery, pediatrician copays) of having a baby under your current plan. You can then use that info to make informed decisions--like switching to an in-network sonogram facility or starting those prenatal Pilates classes you totally didn’t know you could be reimbursed for.
AND THE HOSPITAL
You’d be surprised at the range of out-of-pocket expenses that insurance won’t touch. Everything from fees for a private room to the cost of circumcision. It’s always better to know up front. (And, if possible, to set aside money in a flex account to pay for these expenditures.)
EVENTUALLY, YOU SHOULD ALERT YOUR EMPLOYER
Ideally, you and your husband looked into your companies’ family-leave policies and benefits (and even racked up extra vacation days) before you got pregnant. If so, when you’re ready to approach your boss or HR rep, you have a general idea of how the conversation will go. If you don’t love the policy, come to the table with a concrete plan of how to make it work better for you. Maybe it’s a work-from-home arrangement after maternity leave ends, maybe it’s an advance on your year-end bonus to help with unpaid time. Negotiate: You’d be surprised what you can get.
DO A STATUS CHECK ON YOUR EMERGENCY FUND
Your goal: Have at least three to six months’ worth of living expenses saved before the baby arrives (and more if only one of you plans to work).
AND EVALUATE YOUR PLANS FOR CHILD CARE
It’s tempting to leave this process for maternity leave, but if you know you’ll be heading back to the office, start researching child-care options now. Some day cares require you to get on a waiting list months in advance, and some nannies can take aeons to vet. Plus, it’s worth bringing your plans up with your employer. Many workplaces actually allow you to put as much as $5,000 into a flexible spending account for child care, a tax-free benefit that can seriously offset the cost.
ESTABLISH (OR UPDATE) YOUR WILL
Ugh, these conversations can feel stressful, but…you know…they are good in the long run. Services like Quicken WillMaker are inexpensive and make it easy to set everything up and make updates, like who will look after your kids and at what point your children will have access to their inheritance.
AND CHANGE THE BENEFICIARIES ON YOUR 401K
Adding your baby’s name to your 401(k) and IRAs is a minor change, but an important one. You should also get clarity on how the funds will be doled out (for example, a trust versus an immediate check) and any penalties that’ll come into play should your kids dip in early.
DON'T FORGET ABOUT THE NEW MOM TAX BREAKS
Yep, you get a tax break for having a kid. Typically, this nets out to about $4,000 a year (depending on your income level), not to mention bonus savings if you’re paying for (over the table) child care. Your HR rep can help you update your exemptions.
Higher ed doesn’t come cheap, which means it’s never too early to start socking away cash. Your best bet is to set up a 529 plan, which offers tax-free growth and withdrawals, as long as the funds are eventually used for education.