First Person: Developing a Baby Payment Strategy

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There's little doubt that babies can be expensive. And even those who have planned things out well in advance can be hit by surprise costs due to complications of a birth or things that they never factored into the birthing plan.

Even people like us who planned and budgeted before conception and who were lucky enough to come through the process with a healthy baby can find costs getting the better of them. However, by developing a baby payment strategy, we were better prepared than many for the big-ticket costs of planning for, having, and beginning to raise a new baby.

Laying out preparatory costs

There are all kinds of expenses that can come into the preparation for having a baby. From those little things like cute baby outfits and new furniture, to diapers, wipes, formula, and more, all those costs can easily add up to hundreds or even thousands of dollars.

We made sure that we did our best to reduce our costs in this area by doing things like buying used clothing from resale shops or baby items from higher-end resale shops, using leftovers from our first child, and accepting hand-me-downs from friends and family. However, even then, the costs for all those items we didn't have or didn't want to buy used -- things like a new baby swing, playard, and certain other items -- added hundreds of dollars to our preparatory costs.

To better prepare for such expenses, I made a list of all the things we needed and the items' estimated costs. This way, not only did I have a good grasp upon the total amount we needed to set aside for such items, but I had a running checklist that I could use to keep us on track for our purchases. This ensured that in the months leading up to our baby being born, if we saw certain items on our list for sale, we could buy them at lower prices and cross them off our list so that by the time baby was born we had all that we needed and at a lower price than I'd estimated.

Determining health and medical costs

Determining what health and medical costs would be for our baby being born was certainly difficult. In essence, I really just budgeted the full amount of our deductible and out-of-pocket costs for my wife and the newborn just to be on the safe side and account for any unforeseen issues or complications.

As the bills started coming in, I ensured that I retained copies of all of them in a separate "baby bill" folder, along with an accompanying list of all charges - billed, paid, and outstanding -- that I printed off from our health insurance company website. This way I could check off items that were paid and knew what and how much was still outstanding at any given time. This made it much easier to track and budget for these items in the times leading up to and after our baby was born, since we continued to get bills for nearly a year thereafter.

Bolstering emergency savings

Even knowing all the costs associated with having a baby before baby arrives can still leave you scrambling if you don't have enough money to cover them. This is why we began bolstering our emergency savings well in advance to baby's arrival. Putting just an extra $50 to $100 aside each month can add a little extra cushion to the old emergency fund.

Thankfully, baby costs can be drawn out over the period of a year or even two years as the birthing bills trickle in. However, to avoid sticker shock, we did our best to pay expenses as they arrived leading up to baby's birth so that when baby came -- along with those hefty hospital bills -- we were in the clear and could handle them as they came.

In this way, we were able to pay for our baby relatively easily and not encounter too many surprises along the way.

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Disclaimer:

The author is not a licensed financial, medical, or parenting professional. The information provided in this article is for informational purposes only and does not constitute advice of any kind. Any action taken by the reader due to the information provided in this article is solely at the reader's discretion.

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