Millennial Money: 4 money moves to make before the baby arrives

The arrival of a new baby is exhausting. During the first few weeks, your waking hours are a cycle of feedings, diaper changes, and Google searches for “is it normal for a baby to (fill in the blank)”.

Mustering the energy — and attention span — for otherwise routine tasks like showering and paying bills can seem like a daunting task. You’ll be lucky to remember what day it is, let alone when your next credit card payment is due.

Do your future sleep-deprived person a favor and start preparing your finances early in your pregnancy so that things can run on autopilot for some time after the baby arrives.

If you don’t have a budget yet, start there, says Cecilia Williams, mother, certified financial planner and chief operating officer of Halbert Hargrove, a financial planning firm.

“Outline all of your current income and expenses so you and your partner have a clear understanding of where your money is going each month,” says Hargrove. “This will definitely need to be adjusted as you get closer to your due date, so having a starting point is priority #1.”

Then make a plan to manage the other costs, big and small, that come with having a baby.

FIND OUT THE COST TO ACCOMPANY YOUR CHILD

The cost of childbirth is high. The average delivery cost can vary from $10,000 to $20,000, depending on where you live. Even with insurance, new parents can expect to shell out several thousand dollars for maternity care.

Contact your insurer or the hospital where you plan to give birth for more specific figures. Then dive into your healthcare coverage to understand your coinsurance, deductible, coverage maximums and limits.

Anthem, United Healthcare, and other major insurers have tools you can use to get estimates of total and out-of-pocket costs, based on your plan. Use these numbers to set a realistic savings goal to cover them.

Do you have access to a flexible spending account? If the schedule allows, set your dues to gradually save tax-free on your hospital bills. When the hospital bills start coming in, you can pay directly from your FSA or use a rewards credit card and request a refund.

PLAN AHEAD FOR PARENTAL LEAVE

Paid parental leave is far from guaranteed. In fact, only 11 states and Washington, DC have paid vacation laws, some of which won’t go into effect for several years. And only 25% of employers offer some form of paid leave, according to a 2019 survey of employer health benefits by KFF, the nonpartisan health care think tank formerly known as the Kaiser Family Foundation.

If you have paid time off through your employer, ask questions early. Find out how many weeks are covered and at what percentage of your salary. Do you have to use vacation and sick leave first?

You also want to know when and how your benefits will be paid, especially if they will come from multiple sources. Trust me, you don’t want to be a week postpartum emailing your benefits provider to sort out the logistics of your leave payments.

If you don’t have access to paid time off or plan to take unpaid overtime, practice living on the reduced income whenever possible. This will help you identify optional expenses to reduce or eliminate and help you build a savings cushion before your baby arrives.

START “PAYING” FOR CHILD CARE

Childcare is the biggest monthly expense for most new parents. Get off to a good start by “paying for” daycare well in advance of your baby’s arrival.

Put the money in a separate savings account – ideally one that pays interest – each week or month. This helps you adjust to new expenses and allows you to bank a few months of childcare expenses that you can leverage for upfront costs like deposits and application fees.

Not sure how much childcare costs in your area? Check with your local friends group or parent group to get an idea of the cost of childcare, a nanny or other arrangements.

You can also fit other baby essentials, like diapers, formula, and wipes, into your budget now, by making an educated guess. It doesn’t have to be perfect; you can adjust on the go.

AUTOMATE INVOICES AND CREDIT CARD PAYMENTS

Set all recurring bills to automatic payment, ideally from an account or credit card. If you can, go one step further and set up this card for autopay as well.

Carly Campbell, blogger and stay-at-home mom of two, says it was one of the best things her family did before welcoming their first child.

“All the various bills were processed without our active attention,” she says. “We only had to check the bank account once a month to make sure there was enough for the lump sum payment.”