Tuesday, February 28, 2006

Finances With Baby

Having a baby puts serious strain on your financial state because babies require so much care. Here are a few of the financial concerns that you will need to think about if you have a new little one coming.

First, how much new stuff do you need to buy?

Well, that depends in part on how old your last child is now. If you have children fewer than three years apart, chances are that you still have most of your old stuff. Otherwise, you have probably discarded much of it. If you are not in the financial shape to purchase everything new, begin looking now for the new baby. You should be able to find clothing as well as furniture for less money at discount stores. If this baby is your first, then open your wallet. They are expensive little buggers, but they are worth every penny.

How will you save for college?

Yes, it is 18 years down the road, but it will be here before you know it. You will not be able to go backward and save for the baby in retrospect. If you are like us, you paid much of your own way. My husband and I paid our way through college with a little help here and there from our parents when they could afford it. We understood the reasons. My mom was very young when I was born and had worked hard keeping her head above water. My in-laws had five children, so their finances were always stretched thin.

We want to provide a different opportunity for our children, as most parents do. That means that we want to provide them with enough money to fund their college education. While in an ideal world, we would be able to pay for everything, including their living expenses, I am just not sure that will happen. Instead we are going to want to pay at least the actual cost of attendance. Looking at projections, if you are having a baby right now, you will need about $200,000 for college! We are aiming for $100,000 because that estimate includes living expenses. You should begin thinking about financing options now for your college fund.

Do you need a new car?

Now is not the time to get that sports car you have always dreamed of owning. Talk to my husband. He was all set to start looking at Dodge Chargers, but with the possibility of a new baby, we are not sure that is a good move to make. If you have a small car or one that is not reliable, you will want to think about upgrading. Reliable transportation will become very important, and you will want a car that is large enough for you to fit everything.

What about diapers? And baby food?

Yes, these parts of having a baby are expensive. The costs are so much that we actually had a separate budget for our son during his first year. We did not want to include it in our grocery bill because it would skew what we were spending. You can prepare yourself now (do it now, there will not be time later) for saving some money. You can make your own baby food, for example, or opt to use cloth diapers, at least a portion of the time. Learn now how you can start to save money with your baby so that you will not be overwhelmed by the cost. At the very least, you can begin picking up some things every time you go out so that you will have a stockpile when the baby is born.

So the final result is that babies are expensive. They can be less expensive if you are committed to raising them in a frugal lifestyle, but there are many items that babies simply have to have. Instead of worrying yourself about the cost, you should try to focus on planning. It is best if you can begin to get a handle on what you need to do to take care of your financial concerns. Sit down with your partner. Talk it out. Know what you plan to do and then hop on it. Especially if you are dad, being proactive here can make you much less stressed about the whole prospect.

By Julia Mercer

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