Children and Family

Children and Family


Planning is Key when Having a Baby
by CCCS Atlanta



If you've recently discovered you are expecting, or if you are making plans to start or expand your family, you are not alone. More babies are conceived this time of year than any other. And while having a baby is likely the greatest joy in life, the financial impact can sometimes be overwhelming.

"Too few parents prepare themselves for the increase in costs that comes with having children," said Suzanne Boas, president of Consumer Credit Counseling Service of Atlanta. "They wait until the baby arrives and then struggle to figure out how to manage their monthly budget."

The U.S. Department of Agriculture reported last year that the cost of raising a child to age 17 could reach half-a-million dollars. And while these figures include everything from food, housing and childcare to insurance, medical care and education, the reality is that for even the best money manager, having a baby will increase your monthly expenses. The good news is that if you spend some time now making financial plans, you can ease the financial worries and spend time just enjoying your baby.

CCCS offers tips to help expectant parents prepare for their new bundle of joy:

Make a will, or revise the one you have. Making a will is one of the greatest gifts you can give your family. It ensures that they won't have to spend months sorting out complicated financial and legal issues if you die. It also gives you an opportunity to name a guardian who will take responsibility for your minor children. While do-it-yourself will kits are available, it is generally a good idea to have a lawyer draw up your will to ensure it addresses your specific needs and adheres to the laws in your state. A simple will can usually be completed for just a few hundred dollars. If your situation isn't complex, you can do it yourself for less than $50 - try Quicken's Willmaker Plus software.

Review your life insurance. The need for life insurance is never greater than when you have dependent children. And both parents need to be insured, even if one is staying home to raise children. Explore the options. Term insurance is the least expensive option, and locks in a fixed yearly rate, but it only covers you for the term of the policy. Take advantage of employer-sponsored plans or talk to your insurance agent about your options. If you want to get an idea of how much insurance you might need, there is an insurance calculator at http://www.bankrate.com/brm/insurance-advisers/life-insurance.asp.

Explore your medical insurance options. If this isn't your first child, there won't likely be any added expense. But for families welcoming their first child into the world, the cost of adding dependents to your policy can be staggering. If both parents are working and have access to medical insurance, compare policies to see which offers the best option for your family, or check into independent policies outside the workplace.

Make plans for maternity leave. Review your company's maternity leave plan and then consider all your options. If you're planning a 6-week leave and you have access to short-term disability or paid leave, the impact on your income might be minimal. But what if you decide to take 12 weeks off, or aren't planning to return? While staying home will eliminate most childcare expenses, it will still be an adjustment, both financially and emotionally.

Research childcare options. If you are planning to return to work, it is a good idea to make plans for your child well before he or she is born. Childcare centers often have long waiting lists. Consider your options: at-home care in your home, home-based childcare in another home, or traditional childcare centers. Be sure to visit lots of places and get referrals from friends and family. When visiting a center, talk to parents. Not sure where to start? There are many resources for information about finding quality childcare, including the National Network for Child Care, www.nncc.org.

Saving for college. The best time to start saving for college is soon after your baby arrives. There are so many options for saving that help make sending a child to college affordable, including pre-paid college plans and educational savings plans. You can learn more about college savings plans at www.savingforcollege.com and www.collegesavings.org.

Review your monthly budget, or create one. Having a baby will add to your monthly expenses in some areas and reduce them in others. Diapers and formula alone can make quite an impact, and you'll see increases in miscellaneous expenses too, such as paper towels and laundry detergent. Utility and water bills will likely increase as you'll be home more often and have more people to bathe and more laundry to wash. Medical expenses, including co-pays for visits to the pediatrician, can really add up, especially in baby's first few months. And if you're planning to return to work, the cost of childcare can add several hundred dollars a month to your expenses. Of course, your entertainment budget for dinners out and movies will likely decline as you spend more time at home. The key is to know how your money is being spent now and to make a plan for how things will change once the baby arrives. For a Financial Health Test and budget calculator, go to www.cccsinc.org.

Getting ready for baby. A crib, a stroller, a car seat (or two)... getting ready to bring baby home can mean a lot of first-time purchases. You may receive some as gifts from family and friends. For other items, consider shopping at consignment shops and garage sales for slightly used items at much reduced prices. It is a good idea to purchase new car seats to ensure they haven't been involved in an accident.

Start a savings plan. If you already have a savings account, try to increase your monthly contributions. If you don't have one, get one started so that you will be better prepared for some of the unexpected expenses of having a baby. If you have trouble saving once you get your paycheck, see if your company has direct deposit and have a portion of your check put right into savings each payday.

Want to calculate the costs of raising a baby? Find a helpful calculator at bankrate.com http://www.bankrate.com/brm/calc/raiseChild.asp.

"Almost every expectant parent worries about money, said Boas. "With a little advance planning, you can spend less time worrying and more time enjoying your little one."


About CCCS of Atlanta
Consumer Credit Counseling Service of Atlanta is a nonprofit, community service agency dedicated to empowering people to achieve a lifetime of economic freedom. CCCS Atlanta provides free, confidential budget counseling, community and personal money management education, debt management programs, and comprehensive housing counseling. Contact CCCS Atlanta by phone at 1-888-771-HOPE (4673), or visit the Web site.