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So you and your spouse are now soon to be parents? Congratulations! Even though you may have a few months until your baby is born, the time to start planning for it is right now. One of the best ways you can prepare for your child is by paying down your debt before it comes. Your budget is only going to get tighter when the baby comes and you may need to rely on credit a bit more, so obviously you want to have plenty available. Many new parents are unprepared for all the expenses involved with raising a child, expenses that reach about $10,000 a year according to recent estimates. That’s a sizable amount of your income, which is why you need to plan your budget as early as possible. Here’s a look at how you should manage your finances and budget before your baby arrives.
Managing Your Finances with a Baby
- If both you and your spouse work, you should start getting prepared now for eventually having just one line of income. After your child is born, you or your spouse will certainly need to stay home from work for several weeks or months, which is bound to stretch your budget. It means you’ll probably need to cut back your lifestyle so no vacations, fancy restaurants, designer clothes, or major purchases for a little while.
- Knowing ahead of time that your family will need to get by on just one salary for awhile, you should begin paying down your debt several months before the baby is due. Once your child is born, you’ll have a host of new expenses and even less money to pay for them so lower your debt while you still can.
- Even if you can’t get rid of all of your debt before the baby is born, hopefully you’ve kept at least one credit card with a fairly low balance. Keep this card tucked away for emergencies, as you will inevitably run into a few.
- If both parents plan returning to work soon after the baby is born, start calling day care centers or planning for a nanny as soon as possible. Day cares are often expensive and many parents struggle finding the right one. Most day cares cost over $100 a week and hiring a nanny can easily cost upwards of $300 a week.
- While it’s important to provide everything your child needs, experts agree that too many people fall into the “baby-shopping trap.” They end up going over board by spending far too much on things their child doesn’t even necessarily need. Talk to a friend or relative who is already a parent about what you really need and stick to the basics.
- Does all this financial planning sound difficult to you? Try not to worry about it, having a child puts a strain on any budget, but anyone who’s emotionally ready to be a parent can figure out the finances.
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