Preparing your finances for parenthood is an important step to take before welcoming your first child into the world. Although the newest member of the family is small, they come with a long tally of expenses. Prior to becoming parents, my husband and I made the decision to get our finances in better working order. Here is a look at five financial decisions we made before welcoming our first born into the family.
Pay Off Debt
Prior to bringing our first child into the world, we wanted to pay off as much debt as possible. By doing so, we had more money to spend in other areas, raised our credit score, and overall, put ourselves in a much better financial situation.
Reconfigure Our Budget
We knew a baby would change our lives, we just didn't realize how dramatically our child would affect our budget. Expenses such as daycare, formula, diapers, and more, really add up. We reconfigured our budget and got rid of unnecessary expenses. By drawing up a new budget, we were able to fit in our baby's expenses with ease.
Update Health Insurance
One of the biggest expenses we faced with bringing a newborn into the world other than the hospital bill was health insurance. We needed to upgrade our standard policy to a family policy that offered more coverage. Previously, my husband and I were on an insurance policy that offered basic coverage for hospital stays and routine office visits. Once we decided to expand our family, we upgraded our policy to a much more comprehensive plan, and watched as our premium skyrocketed. However, the premium cost is put into perspective when we look at the amount the hospital paid for our medical expenses.
Last Will and Testament
Another important part of preparing for parenthood, is safeguarding your family's finances against the inevitable. As a parent, I am constantly worrying about the "what-if's" in life. We created a last will and testament before the birth of our child so that in the case of our untimely death, our child would be provided for and our estate would be handled as we deemed appropriate.
Finally, the last financial move we made before growing our family was to invest in life insurance. This goes along with the "what-if" factor spoke of above. In the case of my untimely death, a life insurance policy will help guarantee that my loved ones are taken care of financially.
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More from this contributor:
- Personal Budgeting
- Family & Relationships