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How to financially prepare if you're thinking of starting a family.

This article has been edited from the original to reflect our intent to provide information for couples that may be planning to start a family.

Starting a family is a significant – and exciting – step. From where they’ll go to school, to how you’ll arrange child care, there are plenty of things to consider, especially when it comes to your finances. If having a child is in your future plans, the good news is there are ways you can prepare early on to help you feel more confident. The following tips and strategies are to help with saving, budgeting and planning if you’re considering starting a family.

Start saving.
There are plenty of expected (and unexpected costs) that can pop up when you have a child. Whether it’s covering a deposit for daycare or buying paint for the nursery, it helps to have extra money tucked away to help cover costs. You might consider setting up a general savings account for significant everyday expenses and an emergency fund for large, immediate costs. By starting to set aside money now, you won’t have to rely on credit cards for life’s unplanned expenses, like a leaky roof or major car repair, later.

Prepare to reset priorities.
When you welcome home your little one, you’ll no doubt experience some changes to your lifestyle. And as your lifestyle changes, your spending habits will, too. You might find that some expenses – like eating out – will decrease, freeing up money you can put toward other, new priorities like family photo sessions. Once you accept that your priorities are different, you can feel confident about your expenses and how you budget for them.

Create a budget before your baby arrives.
List anticipated monthly expenses like diapers and child care and estimate how much they’ll cost. Consider your new monthly expenses’ affect on your budget and whether you’ll need to make any adjustments to your lifestyle. Review one-time costs you expect to cover throughout the year as well. Here are some one-time and recurring expenses to help you start your budget:

One-time costs:
  • Labor and delivery copays and deductibles
  • Nursery items like a crib, bedding, monitor, changing table and dresser
  • Baby gear like a car seat, stroller, diaper bag, baby carrier and baby swing
Recurring costs:
  • Diapers
  • Formula and food
  • Clothing and toys
  • Child care (if both parents are working)
  • Healthcare
Take care of important financial planning steps.
Once your baby arrives, you’ll be busy. Take care of these steps as early as you can to reduce stress, help prepare for your child’s future and keep your own financial goals on track.
  • Review life insurance.
    Make sure you have adequate coverage and that beneficiary information is up-to-date.
  • Create a will.
    Designate a guardian to ensure your child will be taken care of.
  • Update health insurance.
    Add your new baby to your plan within 30 days, choose a pediatrician in your plan’s network and understand what costs are covered.
  • Save for college.
    Open a 529 college savings plan. The earlier you start saving, the better prepared you’ll be by the time your baby finishes high school.
Look for ways to save.
In all the excitement that comes with first-time parenthood, it’s hard to resist the urge to shower your baby with the newest and best of everything. Here are some ways to save while providing your baby with the items he or she needs — and keeping your budget intact.
  • Ask siblings, neighbors and coworkers if you can borrow items in good condition that they aren’t using. As your baby gets older, consider starting a clothing or toy swap to share the savings.
  • Join a membership club like Costco to enjoy big savings on items you can buy in bulk like diapers, wipes, milk, cereal and batteries.
  • Don’t purchase everything at once. Think about what you’ll need during each stage of your baby’s first few years so you can continue to plan and budget.
  • Make your own baby food and healthy snacks, or purchase store brand items.
  • Consider wants versus needs. Talk to friends who are parents and ask them which items you really need, and which ones you can do without. For example, does your newborn really need a wipe warmer or designer shoes?
  • Cut back on non-essentials if you need more wiggle room in your budget, such as subscriptions you rarely use, or eating out less frequently.
  • Take advantage of tax deductions to lower your taxable income. If your employer offers a flexible savings account for childcare, or a health savings account for medical expenses, be sure to sign up.
Planning and budgeting for a new baby can go a long way to reduce the financial stress that can come with added expenses. The payoff? More time to spend with your expanded family creating memories, and the peace of mind that you’re still working toward your future financial goals. If you have questions about saving and budgeting for your new baby, don’t hesitate to contact your local Commerce Bank branch for more information.

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