Here in the U.S., the pandemic and initial lockdowns occurred back in the beginning of March. I haven't read anything firm on it yet, but it wouldn't be shocking to see a surge in new babies coming into this world right around now -- a potential upside of all the bad that has happened.
As easy as it may be, this is no time to forget the fundamentals of planning for a new baby. No matter what's happening in the world around you, don't overlook these important preparations:
Review and revise your budget. A baby can strain both sides of your budget equation: income and expenses. You and/or your spouse may take time off from work -- or maybe you've already been put in that position involuntarily. In either case, it could or would be without pay. Your plan to work also could change. The bottom line is that having a baby might affect your family's income -- in the short and long term -- so plan for it. On the expense side, you'll face an array of new costs: diapers, food, clothing for you and the baby, and increased health care. Build a budget that accounts for changes to both income and expenses.
Check life insurance. As with any major life event, the arrival of a baby is an opportune time to ensure you've got adequate life insurance. According to the U.S. Department of Agriculture, the average price tag for raising a child from birth through age 17 is just under $234,000 -- and that doesn't even include college -- so you'll want to make sure you have your bases covered. Use an online calculator to see where you stand.
Read up on the tax code. Tax bennies like the child tax credit, child-care credit and earned income tax credit are all part of the tax lexicon of parenthood. Get familiar with the rules, and don't leave any money on the table at tax time. You'll have plenty of other opportunities to use what you save!
Create or update your will. For parents, a will is critical because it allows you to name both the physical and financial caretaker for the new family member if something happens to you. You don't want any confusion regarding these instructions and certainly want to be the ones to make the call.
Do your homework. Check with your employer to find out what is offered from a paternity and maternity leave standpoint. The Family and Medical Leave Act requires employers with more than 50 employees to offer 12 weeks of unpaid leave. Perhaps your employer offers paid leave? Check it out. Also, investigate the financial implications with respect to health care expenses and insurance. How much will that ultrasound cost, for example?
Build your baby fund. Whether you're going to be setting aside money to cushion the impact of lost income or new expenses, having a significant stash of cash goes a long way toward reducing your stress. And while you're at it, start purchasing -- or gathering from friends and family -- everything from diapers to strollers to flatten your spending curve. The normal three to six months' worth of expenses in an optimum emergency fund may not be enough, so start saving today.
It's exciting to think about 2020 being remarkable for something good, so get to work on your homework to properly set the stage.
