Having a child is a life-altering experience – emotionally and, of course, financially.

Perhaps the most important part you will have to prepare for is the financial responsibility that comes with a child. 

In a study conducted by the United States Department of Agriculture, a middle-income family will spend over $200,000 raising a child from birth to the age of 17. 

Nonetheless, you should not be alarmed by the six figures because you still have time to prepare before and after your baby arrives to ease the financial transition into parenting. 

There are many businesses with services available to help you prepare financially for your child. An example of a business is SoFi, an online company that offers personal loans. You can visit this page to get access to a SoFi personal loan.

Below are some tips to help you prepare financially for your child:

1. Make Budget Adjustments

Before the baby arrives, you will need to assess your monthly spending to know things you can cut back on or eliminate entirely.

Unnecessary things like forgotten subscriptions or services you don’t take seriously, like a $50 gym membership you only use twice a month, should be canceled.

You could also start looking for better ways to make money or search for more springs of income. This might require you to find a higher-paying job, work more shifts, or even start your own small business.

Preparing for a baby by reducing your spending and increasing your income can allow you to save more money for a child. It will also assist you in meeting your financial objectives.

2. Review the Terms of Your Maternity Leave and Insurance Coverage 

This tip is for the mothers. If you are an expecting mother with a job, you need to comprehend the basics of your maternity leave to plan for your finances while you’re not working. 

You need to answer relevant questions like how long is the leave and how much will you be paid during the leave?

If your leave is fully paid, that’s great; if it isn’t, put some money away to make up the difference, or even practice living on a smaller budget to get used to it.

You also need to review your health insurance coverage. This will also help you know how much of the hospital bill you are saving for.

3. Get or Update Your Life Insurance Coverage

Getting life insurance cannot be overemphasized. There is a calm that comes with knowing you have life insurance to protect your loved ones if you die.

A life insurance policy can help replace your income if you pass away. It will really help your family a long way.

However, if you already have life insurance, it is vital you update your policy to benefit your child. This will make your child the beneficiary of your life insurance policy.

If you pass, your life insurance policy might become an integral part of your child’s financial stability. 

Consider consulting a qualified representative about the various life insurance policy options to discover the one that best meets your needs and covers your family’s monetary demands. 

4. Make or Change Your Estate Plan

Creating an estate plan is critical for your finances and planning for a kid. 

An estate plan means deciding how your assets will be kept, managed, and distributed after you pass away. It also considers how your property and financial responsibilities will be managed in the event that you become disabled.

Your estate includes your cars, stocks, debt, painting, and pension. It is essential you create an estate plan in order to quickly transfer your assets to your child upon your passing. A common example of estate planning is writing a will.

However, if you already have an estate plan, you’ll need to update it to reflect your financial goals for your new child. And if you have more children, you’ll need to re-update the estate plan.

5. Consider Taking a Life Insurance Plan on Your Child

No one plans to lose a child. However, it is important to always be prepared for unforeseen circumstances. The purpose of child life insurance policies is to cover the funeral cost if your child passes. 

In addition, a child life insurance policy is more of a necessity for families with more than one child because funerals are so expensive and could derail other financial expenses.

6. Create Emergency Funds

Emergency funds refer to the money you set aside for use in the event of a financial emergency.

An emergency fund is created to give a sense of financial stability by providing a safety net that may be used to cover unexpected expenses such as medical bills or essential home repairs.

This type of fund should consist of cash and other highly liquid assets like bonds and stocks, which eliminates the need to use high-interest debt options like unsecured loans or jeopardize your financial future.

If you do not have emergency funds, it is time to get one because kids are fragile and accident-prone. 

You could never tell when you will need it. Also, your emergency funds may be part of the financial support your child receives if anything happens to you.

7. You Need to Become An Intelligent Shopper

When it comes to budgeting for a baby, you’ll need to become a clever shopper. 

This is very easy. All you need to do is to buy only absolute necessities-no more impulsive shopping.

Also, shopping for your baby early is essential. For example, you could shop against the weather, meaning buying winter clothes for your child during the summertime, when it is cheaper, and vice versa.

You get nine months to form your baby, so chances are you will get to sell all the seasons before the baby arrives.

Another shopping tip is to buy things in bulk because they are cheaper. Just be sure to not overbuy products that spoil fast. Keep the bulk buying limited to clothes and essential long-lasting products.

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