How Not to Break the Bank When Budgeting for a New Baby

As seen on AM Northwest's Television Program

See Video Link: AM Northwest TV (Budgeting for Baby, 1/31/08)

You're excited about the bundle of joy that's going to join you in nine months.  Now, you want to make sure you don't break the bank by doing all of the right things to budget for baby's arrival.  Based on an exclusive survey of 1,000 new moms from Babycenter.com in 2007 they estimated it would cost $7,542 on average for baby's first year.  This amount does not include medical costs which is another $7,600 on average according to the Federal Agency of Healthcare Research and Quality.  No doubt that you want to spend your dollars wisely once baby's here!

TIPS ON HOW TO MAINTAIN YOUR FINANCES:

• Build your budget, track expenses & revise as needed - make sure you know what funds are coming in and what is being spent so you can budget for baby accordingly
• Find out what your health insurance covers - review your health coverage including deductible and determine what your hospital bills will be when baby is born
• Get out of debt (credit cards first) - credit cards with a high interest rate are worst at draining your funds so pay them off!
• Determine if a stay at home parent vs. daycare is feasible - sometimes staying at home with baby verses paying for daycare is less expensive
• Check to see if your employer offers a healthcare or dependent care flexible spending account - you can save money on a pre-tax basis and reduce your taxable income
  
• Start a college savings plan - 529 plans allow you to save money now toward college costs and the earnings will not be taxed as long as it's spent on college related expenses.  Check out College Savings Plans  for more information.
  
• Meet with your accountant to see if you qualify for child & dependent-care tax credits.  Adjust your tax withholding to show a dependent child which will give you a larger paycheck
• Draw up a will (name your baby as the beneficiary and also name a guardian) and make sure your life insurance coverage is adequate (two-three times your family's annual gross income)
• Make sure you have an emergency fund set aside - financial experts say you should have at least three to six months in cash incase you lose your job or the unexpected happens
• Don't overspend your budget on "nice-to-have" baby gear - be wise and don't waste money on the extras but focus on the necessities like diapers and a car seat
• Buy consignment or recycled baby items & use coupons - save money & recycle by purchasing second hand baby items like a stroller or baby clothing. Use coupons to save money on diapers or baby's toiletries.  

Great Budgeting Website Resources:

Baby Center
Practical Money Skills
College Savings Plan

Health Insurance Consumer Assistance:

• National Insurance Consumer Helpline (800) 942-4242
• National Insurance Consumer Organization (703) 549-8050