How to [Financially] Prepare for a Baby

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riggle
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How to [Financially] Prepare for a Baby

Post by riggle » Mon Apr 13, 2015 4:19 pm

Hello all,

I was hoping you would be able to help provide advice regarding a question that I've been thinking about.
My wife and I are planning on having a baby. Therefore, I assume our budgets will be changing, but I have no idea by how much. We have been working on saving more, and lowering expenses. We currently have an emergency fund that will be adequate for 6 months at our current spending levels. We fully fund our Roths, and we each contribute approximately 10% (increasing year by year) of our salaries into our 401k (this surpasses past the matching percentage).

My question to you, is whether you think we should increase our emergency fund, assuming there will be new and unexpected expenses, or if we should try to max out our 401K, as this may be the last chance in a while to take advantage of this tax advantaged space. Along with an increased budget due to the baby, there's a chance my wife will not want to go back to work immediately, and I would like to leave this option open.

I also have a taxable account with approximately 16K in it. I would like your opinion on whether I should liquidate this account to effectively put it into tax advantaged space (by using this money as income, and deducting more from our salaries to contribute to our 401Ks), or if perhaps we should simply set it aside in savings to prepare for the baby/unexpected expenses/wife not returning to work?

I will be happy to provide any additional details. Looking forward to your responses.

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whatusername?
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Re: How to Prepare for a Baby

Post by whatusername? » Mon Apr 13, 2015 4:28 pm

Your emergency fund really depends on how secure you feel that you will be able to maintain your income level, and to tide you over if that is interrupted for unexpected reasons. Otherwise it's just "savings." Only you can answer whether 6 months is enough.

As for the 401k, if you are comfortable with your EF at 6 months, by all means contribute!

Others may correct me, but I think the three areas in your spending budget that could change the most will be for childcare, health insurance, and "baby needs" (diapers & formula don't come cheap). Add college savings on for good measure, too. Of the people I know with infants, the general consensus is that it isn't financially very fun until they get out of daycare, but that it gets easier after that. YMMV.

GoldenFinch
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Re: How to Prepare for a Baby

Post by GoldenFinch » Mon Apr 13, 2015 5:26 pm

We had one in our 20's, two in our 30's and one in our mid-forties. It all works out! Just save what you can and enjoy your baby. We have been both well-off financially and also in dire straights and have concluded, above the necessities, all that really matters is quality time spent together as a family. If your asking these questions now, I'm not worried about you.

Jack FFR1846
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Re: How to Prepare for a Baby

Post by Jack FFR1846 » Mon Apr 13, 2015 5:37 pm

Your best preparation.......remove the word "sleep" from your vocabulary.
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FinanceDad
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Re: How to Prepare for a Baby

Post by FinanceDad » Mon Apr 13, 2015 5:47 pm

Riggle,

Congratulations on the plan to expand your family. My wife and I have three children with another on the way.

My biggest suggestion is to think frugally with regard to children. There are unavoidable expenses, but children don't have to wreck your budget. Furthermore, the tax credits and exemptions (depending on your eligibility) help offset a lot of the costs.

-There are a lot of smart marketing people that try to convince parents that they need every toy, stroller, six different kinds of seats, new furniture etc. Loving parents and a safe environment are the most important things for them. Consider buying used (or accepting hand-me-downs from friends and family) the things you do need. Lots of people all around you have had children and this stuff is just in a basement and are waiting for an opportunity to pass it on. The exception are safety items like a car seat. Always buy this now and check for recalls.
-Child care- My wife worked part time when we had the first two children, but now stays at home. Daycare costs seem to be the biggest expense (if your wife decides to return to work). We were fortunate in that we found a family friend to watch the children for a fraction of what it would cost through a large commercial day-care. This won't always be an option, but it is worth being creative.

Medical Costs- I am not sure of your insurance situation, but if you have a HDHP (high-deductible health plan), strongly consider an HSA. We are using it to soften the blow of delivery costs, etc.

Best of luck!

FinanceDad
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Re: How to Prepare for a Baby

Post by FinanceDad » Mon Apr 13, 2015 5:48 pm

Jack FFR1846 wrote:Your best preparation.......remove the word "sleep" from your vocabulary.
That too!

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kybourbon
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Re: How to Prepare for a Baby

Post by kybourbon » Mon Apr 13, 2015 5:57 pm

Jack FFR1846 wrote:Your best preparation.......remove the word "sleep" from your vocabulary.
I would have to agree with the above.

Assuming the child is healthy, there is no need to change the emergency fund long term. It would be reasonable to increase the emergency fund until the health of the child is determined. The biggest question is the care of the child once it has arrived and whether someone in the household is going to go part time; thereby reducing your overall income. My wife and i decided that we didn't want someone else exclusively raising our child for us, so she went part time and we have a nanny the rest of the time. This is a HUGE expenditure in our household budget; like to the tune of 17k per year. Not cheap, but well worth it considering we get to avoid day care and our nanny is beyond great. But my wife's full time earning potential is substantial and this was, and continues to be, a big hit to our bottom line. We still save as before, but have reduced in other areas.

Vacations also make for interesting situations; do you take the kids or not? Traveling while kids are young is difficult, so we choose to leave them home about half the time. If you do this, go ahead and budget for their care while your gone, unless you have family help in your home town.

ky
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riggle
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Re: How to Prepare for a Baby

Post by riggle » Mon Apr 13, 2015 10:50 pm

Thank you all for the wonderful tips and advice.

Thankfully, we have already discussed purchasing maternity and baby clothes from second-hand stores, and borrowing as many things from family/friends/coworkers as possible.
Unfortunately, I don't think we've been able to figure out how to invest sleeping hours.

Psychologically, it feels like I should be saving money for the baby. There's something in the back of my head saying that my whole world is about to be turned upside down. However, I know that these are prime "accumulation" years, and I don't want to miss out on the compound interest in a tax advantaged space. It's a struggle trying to figure out if we need to keep additional money liquid in case there are expensive health issues, or in case my wife takes extended time off of work, versus getting as much money as we can into tax advantaged spaces while we are both working, and don't have a baby depending on us.

I think I should be ok padding the e-fund a little more, and using any remaining money for investing.
I'd still love to hear more of your advice.

DTSC
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Re: How to Prepare for a Baby

Post by DTSC » Mon Apr 13, 2015 11:29 pm

Also remove the words "free time" and "hobby" from your vocabulary

Make sure you have enough life and disability insurance.

See if there is a freecycle group near where you live.

Garage sales are a great source of baby stuff, especially if there are wealthier neighborhoods near you. Sometimes you'll find new stuff with the tags still on them - some of those folks just want to get rid of their clutter.

Good luck!

basspond
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Re: How to Prepare for a Baby

Post by basspond » Tue Apr 14, 2015 12:10 am

Best wishes for your family plans. Unless your wife has any complications, I would keep up with what you are doing until she is pregnant. Once she is pregnant, save half of her net salary (after taxes and Roth/401k savings) to cover any time she will be taking off from work. Even though a baby adds a lot of expenses, your spending priorities will change and you will have less other expenses to cover that bundle of joy's costs until daycare kicks in.

Another thing is to get to know your neighbors to scout for future baby sitters.

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White Coat Investor
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Re: How to Prepare for a Baby

Post by White Coat Investor » Tue Apr 14, 2015 12:23 am

In my opinion, people spend way too much time preparing for something that occurs over a long period of time. You don't even need a car seat until 2 days after the kid is born. Don't need a crib for months. A cheap little pack n play is fine. Toys? Clothes? Shoes? A kid doesn't need shoes who won't be walking for 9-12 months. Socks are fine.

It's like time off for the guy. You don't need the first two weeks off or something. It's far more useful to have some extra time off after the mother and MIL leave. These kids are going to be with you for 18 years. There's no rush.

Yes, a little larger e-fund is probably a good idea, especially if you're just getting through a few weeks or months of the mother not working.
1) Invest you must 2) Time is your friend 3) Impulse is your enemy | 4) Basic arithmetic works 5) Stick to simplicity 6) Stay the course

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celia
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Re: How to Prepare for a Baby

Post by celia » Tue Apr 14, 2015 2:49 am

RE: Vacations

We always took ours along and they enjoyed the experience. Kids under 2 fly free (if on a parent's lap) and you can get there faster that way. We often flew to visit relatives, whom we stayed with, so that saves money while giving everyone quality time getting to know the younger ones. If those you are visiting also have kids, that's a bonus for kids to play together. Kids won't be interested in tourist sights for a while, so you can be casual about what you see or do. (I remember seeing different kinds of trash trucks and trees when I was younger!)

If you plan to be on the go with toddlers a lot, get an umbrella stroller that folds up compactly. By picking up the kid and kicking the crossbar in back, it can fold up in a few seconds and you hardly miss a step when getting on an escalator or elevator.
A dollar in Roth is worth more than a dollar in a taxable account. A dollar in taxable is worth more than a dollar in a tax-deferred account.

Professor Emeritus
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Re: How to Prepare for a Baby

Post by Professor Emeritus » Tue Apr 14, 2015 3:47 am

brettdj99 wrote:Riggle,

. The exception are safety items like a car seat. Always buy this now and check for recalls.
-

I add cribs and any kind of "jolly jumper"to this list. There are a huge number of defective and hazardous cribs out there.

Professor Emeritus
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Re: How to Prepare for a Baby

Post by Professor Emeritus » Tue Apr 14, 2015 3:51 am

riggle wrote:However, I know that these are prime "accumulation" years, and I don't want to miss out on the compound interest in a tax advantaged space. It's a struggle trying to figure out if we need to keep additional money liquid in case there are expensive health issues, or in case my wife takes extended time off of work, versus getting as much money as we can into tax advantaged spaces while we are both working, and don't have a baby depending on us.
IMHO You can always make money, you can't go back and get the time you lose not bonding with a child and making sure the mother feels a real partner.

Think about what YOU are doing to raise your child and how that works with your job situation.

2tall4economy
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Re: How to Prepare for a Baby

Post by 2tall4economy » Tue Apr 14, 2015 6:46 am

This can be really expensive or really cheap. And, for the most part, it's out of your hands (at least on the first child). If your wife is anything like mine or any other wives of anyone else I know, she will no doubt have very strong opinions on baby clothes / toys / furniture / etc... and good luck getting in the way of that even if she's otherwise rational.

Also, while wives can be completely normal pre-birth, many get "baby brain" for about 1.5 years after birth before they come back to normal. Mine did this as did my brother's.

Here's the reality: Babys cost next to nothing. *Mom's affected by marketing cost a lot*. Also, I can confirm you won't sleep or have free time without cutting into the limited sleep you have, particularly if you have a high needs baby (the kind that always need attention -- you know the kind, you probably dated girls like this)

Babies don't need a lot of clothes (or any clothes for the first few months anyway)

Babies don't need cribs / bedroom furniture. They'll want to be next to mom for a while anyway. If you have a guest room you are all set already. My son is 3 now and has refused to this day to sleep in the crib and baby bed my wife thought was required (grr!)

Babies don't need toys. Their first years are just exploration of the world. Empty food boxes, plastic coke bottles, shoes, etc... provide endless entertainment for free for at least a year. Buy a toy and weep as your child plays more with the box it came in than the toy itself.

Babies don't need food. Plus, formula is only needed for non-breastfeeding mothers. Breastfeeding is better for the kid anyway

Babies don't need daycare. Unless your wife is pulling down more than the average USA income (>$60k or so in an average cost of living area) it's very likely that daycare / transportation / formula / business clothes budget etc... is a wash vs the benefit of her after tax salary. Of course, your wife may want to have a career and cost isn't an issue too. Not surprisingly, after having 6 months off their jobs, I find many aren't inclined to return to work unless they have to (my experience, your mileage may vary).

Diapers can be reuseable cloth not disposable junk. A little more effort and more cost up front. Sure the Poo thing might turn you off, but your life will revolve around Poo for a while anyway so you'll get used to it.

Babies don't need special college savings. If you invest your excess cash, keep investing it the same way and you'll be fine. Don't get sucked into a 529 plan or some special other savings account.

Babies only need time with their parents, mom's boob, and poo disposal.
You can do anything you want in life. The rub is that there are consequences.

Dandy
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Re: How to Prepare for a Baby

Post by Dandy » Tue Apr 14, 2015 7:05 am

When you say funding "our" 401k signals that both are working. If that is the plan going forward you need to understand what day care expense will be. Baby's are expensive so I would make sure to have some liquidity and/or surplus over monthly expenses. Also, what will be the income hit on mom after she has the baby? e.g. how much income will she lose, if any.

They are expensive but most people manage it - the biggest loss is sleep. But unmatched fatigue is more than offset by unique joy. Good luck.

Grt2bOutdoors
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Re: How to Prepare for a Baby

Post by Grt2bOutdoors » Tue Apr 14, 2015 7:54 am

Eat healthy before and after birth. You will need a ton of energy to keep up with the demands. Empty calories don't help all of the time, just some of the time. Set the DVR to record, you won't be able to watch entire shows/events in one sitting. Learn how to change a diaper, swaddle a baby and how are your singing/rocking skills? You will have this child for a lot longer than 18 years, they will always be your kid even when they are 30. :)
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

kjvmartin
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Re: How to Prepare for a Baby

Post by kjvmartin » Tue Apr 14, 2015 8:23 am

4 Words:

Mom to Mom Sales

Wife takes $40 cash and comes home with just about everything the baby could need or want for the next few months and then some.

flyingbison
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Re: How to Prepare for a Baby

Post by flyingbison » Tue Apr 14, 2015 8:45 am

Plan now to take every single day of your allowable leave time when the baby is born. Doesn't necessarily have to be right away, or all in one block, but if you are covered by FMLA, you are allowed to take up to 12 weeks. Spend every hour of it with your baby.

jjface
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Re: How to Prepare for a Baby

Post by jjface » Tue Apr 14, 2015 9:05 am

There is a lot of conflicting parenting advice here. Trust your own instincts and that of your wife's above all. Know what kind of parents you want to be and stick to that.

It makes me cringe when I hear of parents who go on vacation without their kids or fathers who are hands off and consider any time after conception as free time. However I am sure they are likely to find things in my parenting that makes them cringe.

Personally I loved making my own baby's food once they had finished breastfeeding. I used the fresh baby so easy kit to begin with and experimented from there.

i wouldn't be tempted by the expensive cribs - the cheaper ones work just as well for a fraction of the cost.

I'd keep your taxable money in taxable for now. Several years down the line when you have a good feel for your expenses you can always move it to retirement then if you feel you don't need it for your child.

NoVa Lurker
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Re: How to Prepare for a Baby

Post by NoVa Lurker » Tue Apr 14, 2015 9:34 am

For the first two years, the only big financial impact is if a parent stops working to care for the child, or if you pay for child care to enable both parents to work. (Unless you have great family help, you're in one boat or the other.)

We have two small kids. For us, all the other expenses have canceled each other out, except child care / not working. On the "increased expense" side, you pay for diapers, wipes, car seats, and some clothes and equipment here and there. On the "decreased expense" side, there are some small tax credits, and you end up eating out and doing things outside the house a LOT less. That's all basically been a wash for us, expense-wise. My wife exclusively breast fed each kid to about 5-6 months, and then she weaned the breast feeding gradually until right when she returned to work, so we didn't start spending any real money on food for the kids until around 18-month territory.

Our older one is turning 4 now, and he devours real food in large quantities, does a bunch of activities that cost money (swimming, soccer, and now t-ball), and has birthday parties all the time, where we spend $20 a pop on a present that we know the kids' parents would prefer not to have.... We also have to buy him new clothes, because the stuff at consignment sales for 4-year-old boys is all pretty well shredded (versus clothes for 3-6 months, which mostly looks unused). On the plus side, our kids will be going to public school, so the child care expenses will finally be less then (though we'll still have to pay for some after-care).

So what's your plan for child care?

Texanbybirth
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Re: How to Prepare for a Baby

Post by Texanbybirth » Tue Apr 14, 2015 12:22 pm

2tall4economy wrote:This can be really expensive or really cheap. And, for the most part, it's out of your hands (at least on the first child). If your wife is anything like mine or any other wives of anyone else I know, she will no doubt have very strong opinions on baby clothes / toys / furniture / etc... and good luck getting in the way of that even if she's otherwise rational.

Also, while wives can be completely normal pre-birth, many get "baby brain" for about 1.5 years after birth before they come back to normal. Mine did this as did my brother's.

Here's the reality: Babys cost next to nothing. *Mom's affected by marketing cost a lot*. Also, I can confirm you won't sleep or have free time without cutting into the limited sleep you have, particularly if you have a high needs baby (the kind that always need attention -- you know the kind, you probably dated girls like this)

Babies don't need a lot of clothes (or any clothes for the first few months anyway)

Babies don't need cribs / bedroom furniture. They'll want to be next to mom for a while anyway. If you have a guest room you are all set already. My son is 3 now and has refused to this day to sleep in the crib and baby bed my wife thought was required (grr!)

Babies don't need toys. Their first years are just exploration of the world. Empty food boxes, plastic coke bottles, shoes, etc... provide endless entertainment for free for at least a year. Buy a toy and weep as your child plays more with the box it came in than the toy itself.

Babies don't need food. Plus, formula is only needed for non-breastfeeding mothers. Breastfeeding is better for the kid anyway

Babies don't need daycare. Unless your wife is pulling down more than the average USA income (>$60k or so in an average cost of living area) it's very likely that daycare / transportation / formula / business clothes budget etc... is a wash vs the benefit of her after tax salary. Of course, your wife may want to have a career and cost isn't an issue too. Not surprisingly, after having 6 months off their jobs, I find many aren't inclined to return to work unless they have to (my experience, your mileage may vary).

Diapers can be reuseable cloth not disposable junk. A little more effort and more cost up front. Sure the Poo thing might turn you off, but your life will revolve around Poo for a while anyway so you'll get used to it.

Babies don't need special college savings. If you invest your excess cash, keep investing it the same way and you'll be fine. Don't get sucked into a 529 plan or some special other savings account.

Babies only need time with their parents, mom's boob, and poo disposal.
I've been lurking for a while, but I had to create an account just to second this post. The tone is a bit dry, but so much is spot on. We just had our first, and although the decreased income was tough to swallow the benefits of my wife staying home have been priceless. Our family and friends are across the board in this area (and people are vocal in their opinions), but we really think it works best. I hope our country will continue to grow in support of women who make the decision to stay home with their kids.

I'm not so sure about not saving for college, though as a new dad I haven't decided how we're actually going to do that. My wife has an old IRA that is pretty plump that we might just rollover. (Gotta find some Boglehead articles on that someday.) Your taxable account sounds like a similar situation. I would say to just hold onto it because you can't really plan for "unexpected expenses". If it's of the medical type, you've usually got a few months before the hospital gets a bill out. (We're still getting bills for our girl born in January - annoying :annoyed ) If y'all decide in the future your wife will stay home, then you can work with that money at that point.

Cloth diapers are awesome (savings literally in the $1000s), and breastfeeding is fantastic. Try to choose a hospital where it's encouraged, and be VERY SUPPORTIVE of your wife if she goes this route. It's a TOUGH thing to start doing (we learned that), but there are lots of great resources out there to help you out. Its benefits are well-documented, and the $$$ saved is just icing on the cake.

Lastly, regarding sleep: HA! Sleep as much as you possibly can before the baby comes. And give your wife plenty of relaxation and sleep time as she sees fit. You may even find that she needs to stop working BEFORE baby comes. In the long run, whatever the cost it will be worth it for you two and the little one. After the baby comes, sleep really is at a premium for a while. However, like you said, you can't really buy it so why worry about it?!

"Babies only need time with their parents, mom's boob, and poo disposal." - as a general statement, that is one of the best.

Best of luck and blessings on your journey!

riggle
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Re: How to Prepare for a Baby

Post by riggle » Tue Apr 14, 2015 12:50 pm

Hello All,

I really can't thank you enough for your heartfelt words of advice and anecdotes. I know that I will continuously be going back to this thread through the pregnancy and into my baby's first years of life.

I suppose I feel comfortable now disclosing the fact that my wife is actually 7-8 weeks pregnant. I think I hid this information when I started the post because of silly superstitions, and because I didn't know if I should share that much personal information. The countdown is on :beer

I would like to be able to give my wife the option of becoming a stay at home mom for at least the first year. This is really what I'm trying to prepare for. Living on the single salary, and therefore likely being unable to invest and save for at least a year is quite scary. We know that this will save on infant care costs, likely drop us into the top of the 15% tax bracket, and also possibly open us up to other tax credits and deductions. In the end, it's possible there wouldn't even be that much of a difference in take home pay (if you factor in having to pay for infant day care). However it is still scary and stressful knowing that I will become the "sole provider." However, even though I could be the sole provider for an extended period of time, I know that I want to be very active and involved during this time too. I absolutely do not want to be more concerned about work and money than I am about my baby and wife. I'm saving sick days and vacation days, and will absolutely take the paternity care leave that my work provides. I'm doing my best to plan now, so that we can be in the best possible condition when the baby comes.

I do have one specific financial question. I've learned that I can contribute to my wife's roth IRA even if she has no income. Will I be able to contribute to her already existing Roth IRA, or will I need to open a new "spousal IRA?"

Thank you again.

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mojave
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Re: How to Prepare for a Baby

Post by mojave » Tue Apr 14, 2015 4:27 pm

I am due in three months with our first. This is what I have done, and advice I have:

- learn your health insurance plan and what it does and does not cover. When I was in the planning stages, I opted for genetic testing to see if I was a carrier for several genetic disorders like cystic fibrosis. Turns out, our insurance doesn't cover genetic testing! I got an EOB that said I would owe $6k. Panic ensued. Talked to the genetic testing place, they said don't worry about it - if anything I would only have to cover $25. I never even ended up getting a bill from them (this was over a year ago).

- contribute to an FSA or HSA if you can - I was lucky enough to find out I was pregnant around the time that we were doing our annual benefits elections at work and will contribute $1k in an FSA by my due date. Hopefully that covers most of the hospital cost (my max out of pocket is $2k).

- as others have said, babies are only as expensive as you make them. They will not remember anything from that first year, and could care less what you dress them in. Breastfeeding (if wife is able to do it) is free, diapers aren't as expensive as people make them out to be and that will be your biggest expense.

- don't register for clothes or toys, only what you need. People will buy or give you clothes and toys regardless.

- we feel the same way as you about saving, just saving cash like mad people. Why? I don't know, I just feel better about it!

- make sure you have life insurance. We still don't have it set up, but will before Jr. gets here. My husband is a smoker, which is why I have been delaying it ($$$)

- take classes together, it will help you be able to be more involved in the experience.

- start looking into daycare costs, prepared to be shocked. Daycare will eat up half of my take home.

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KlingKlang
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Re: How to Prepare for a Baby

Post by KlingKlang » Tue Apr 14, 2015 8:13 pm

The best baby advice that I ever read was:

"Your child will be a baby for one year, a toddler for two years, a preschooler for three years, an elementary student for six years, and a teenager for six years. Don't waste all of your money buying baby stuff that the kid won't even notice."

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Matahari
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Re: How to Prepare for a Baby

Post by Matahari » Tue Apr 14, 2015 10:39 pm

To add to the discussion of life insurance: I asked Mr. Matahari to obtain level-term life insurance as soon as Baby Matahari was safely gestating because, for all intents and purposes, the need for life insurance began at that time.

I second the advice about not buying too much at the outset. There is way too much baby paraphernalia being marketed to expectant parents. Just get the basics for the health, comfort and care of the baby and new mother. Much of what you'll actually use in the first 3 months of baby will depend on your wife's and baby's actual needs and preferences. Buy the things you'll need in bulk (diapers and wipes) so as to reduce the number of trips to the store in the early days and maximize the amount of time spent getting to know your baby. :happy

Start saving for college: make those next 18 years work in your favor.

flyingbison
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Re: How to Prepare for a Baby

Post by flyingbison » Wed Apr 15, 2015 7:57 am

Matahari wrote: Buy the things you'll need in bulk (diapers and wipes) so as to reduce the number of trips to the store in the early days and maximize the amount of time spent getting to know your baby. :happy
People still go to the store for stuff like that? :wink: Just have Amazon deliver it to your door.

keystone
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Re: How to Prepare for a Baby

Post by keystone » Wed Apr 15, 2015 8:04 am

flyingbison wrote: People still go to the store for stuff like that? :wink: Just have Amazon deliver it to your door.
That's what I did at first and it was a big help. However, once baby got a little older we looked forward to taking him on regular shopping trips and we discovered that Costco was considerably cheaper for diapers and wipes.

DDMP20
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Re: How to Prepare for a Baby

Post by DDMP20 » Wed Apr 15, 2015 12:13 pm

Matahari wrote: I second the advice about not buying too much at the outset. There is way too much baby paraphernalia being marketed to expectant parents. Just get the basics for the health, comfort and care of the baby and new mother. :happy

Start saving for college: make those next 18 years work in your favor.
This is great advice. Having a baby is a very emotional event. Retailers/businesses understand this and want to take advantage of you. You should look into buying as much as possible at second hand baby/kids stores. You'll save a lot by doing that. Also don't believe anyone when they say you have this item or that for your baby. You will figure out what you need as you go. Think practical. Be practical.
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Re: How to Prepare for a Baby

Post by JimmyD » Wed Apr 15, 2015 12:28 pm

Someone else hinted at it with the mention of "baby brain", but let me just come out and say it - in addition to preparing financially, be familiar with and prepared for the possibility of postpartum depression.

There are so many thrills when it comes to having a new baby, but as the husband of a woman who was severely affected by it and as someone who didn't understand it, I feel it's my duty to warn you: it's no joke. In fact, there were discussions regarding divorce.

Thankfully, after learning more from doctors, therapists, and other trusted sources (not to mention, the passage of time), things are much better now, but for nearly a year, I wasn't sure that I was going to be able to cope with just how bad things were at home. I really wish I would have known more about it beforehand so I would have been better prepared from the onset.

Hopefully, this will be a complete non-issue for you, but again, just wanted to throw it out there.

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Re: How to Prepare for a Baby

Post by DDMP20 » Wed Apr 15, 2015 2:09 pm

jimday1982 wrote:Someone else hinted at it with the mention of "baby brain", but let me just come out and say it - in addition to preparing financially, be familiar with and prepared for the possibility of postpartum depression.

There are so many thrills when it comes to having a new baby, but as the husband of a woman who was severely affected by it and as someone who didn't understand it, I feel it's my duty to warn you: it's no joke. In fact, there were discussions regarding divorce.

Thankfully, after learning more from doctors, therapists, and other trusted sources (not to mention, the passage of time), things are much better now, but for nearly a year, I wasn't sure that I was going to be able to cope with just how bad things were at home. I really wish I would have known more about it beforehand so I would have been better prepared from the onset.

Hopefully, this will be a complete non-issue for you, but again, just wanted to throw it out there.
Fortunately we didn't expereince that but I've heard post partum depression is very tough to deal with. Right now we're in the midst of both of our kids being toddlers. They are only ten months apart; my daughter will be three in May and my son four in July. I've found the toddler stage much, much more difficult than the infant stage. When they're toddlers they're mobile and constantly striving for their indepedence and self gratification. How many times a day can one parent say "don't touch that," "sit in your chair" or "don't hit your brother?" The natural inclination is to use logic in dealing with your toddlers but as I've found out and medical professionals will attest to, toddlers are not just little adults. They're brains are in the developmental stage and work very differently than those of adults.

The OP has been provided with a lot of great financial advice but it's worth mentioning that one virtue of a good parent is patience. This cannot be overstated.
Last edited by DDMP20 on Thu Apr 16, 2015 9:11 am, edited 1 time in total.
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Re: How to Prepare for a Baby

Post by Meg77 » Wed Apr 15, 2015 2:34 pm

Just wanted to comment so I can follow this thread. Congrats on the new addition to your family! As a 30-something female who has been married one year now, I think about childbearing pretty much daily. Is there such a thing as pre-partum depression? :wink:
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Re: How to Prepare for a Baby

Post by sls239 » Wed Apr 15, 2015 2:55 pm

I'll be the voice of dissent - even a short NICU stay can eat up a ton of money and those aren't voluntary. Some babies need surgery shortly after birth to correct defects. I'd consider upping the emergency savings until baby is home. And that isn't even adding possible complications for the mother.

Also, I'd say that the marital relationship needs preparation. There are a lot of things that can go wrong with such a drastic change. Both parents change, and you have to change together and still find a way to have a little magic. A staying connected / sex / romance / keeping sane fund is absolutely necessary IMO.

If she is not going to work for a year - that is another drastic change on top of it all. Think of it - from the age of 4 or so most people get up, get dressed, and go to a place filled with people approximately their age at which they do work and get feedback on their performance. Babies (children in general) aren't known for giving rational feedback or providing predicable work environments.

I don't actually think it is irrational to go through a phase of spending more during this period. For better or worse, you can find yourself reconsidering things, restructuring your schedule or home, changing priorities, wanting to try new things, or desperately seeking solutions to problems you didn't realize you had. (Or maybe you didn't have them before). Again - you cannot go through this experience without being changed - and what you spend on is a reflection of part of that change.

And it isn't always about getting caught up in the emotion. Every child is different and you don't automatically know the child you get. You can try a swing and maybe they don't like it, but maybe they will like the bouncy seat, or they will like a sling, or being swaddled. You have to learn what works for your child, you aren't a psychic. Some purchases will fall flat and others won't and you probably won't know which is which before you try.

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Re: How to Prepare for a Baby

Post by CateinAlex » Wed Apr 15, 2015 4:06 pm

If your wife plans to return to work, make sure she has a good understanding of the maternity leave policies as it is unpaid leave for the majority of workers in this country. I think the US is only one of two countries with no paid maternity leave. That said, if you can save money for her to stay home the entire leave, and even a bit longer, it can make the transition back to work and continued breastfeeding much easier. I went back after 3 months and would have loved the opportunity to be home for 4 months or even 6 months. At 3 months old the baby may or may not be sleeping through the night and life is still exhausting but time with baby is just getting more fun. It would be nice if she can be flexible about how much time she takes off.

Also think about saving or adjusting your budget for other lifestyle changes. Since I returned to work full-time we decided to get a twice-monthly cleaning lady. It makes such a difference to be able to afford that as it allows us more family time when we are home and is a major stress-reliever.

Don't be fooled by all the baby stuff. Buy plain whole milk yogurt instead of special baby yogurt, buy or make jars of applesauce instead of using those pouches, generic formula and diapers are fine (Costco's diapers are supposedly made by Huggies), etc...

Child-care is extremely expensive in many parts of the country. Pretend that you are paying for that now already and see what that does to your budget.

Good luck! It will all work out. And you'll look back and wonder where all your money went before kids.

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Re: How to Prepare for a Baby

Post by White Coat Investor » Wed Apr 15, 2015 5:01 pm

flyingbison wrote:
Matahari wrote: Buy the things you'll need in bulk (diapers and wipes) so as to reduce the number of trips to the store in the early days and maximize the amount of time spent getting to know your baby. :happy
People still go to the store for stuff like that? :wink: Just have Amazon deliver it to your door.
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Re: How to [Financially] Prepare for a Baby

Post by LadyGeek » Wed Apr 15, 2015 6:17 pm

This thread is now in the Personal Finance (Not Investing) forum (financial planning). I also retitled the thread.

Here's the original question:
riggle wrote:...My question to you, is whether you think we should increase our emergency fund, assuming there will be new and unexpected expenses, or if we should try to max out our 401K, as this may be the last chance in a while to take advantage of this tax advantaged space. Along with an increased budget due to the baby, there's a chance my wife will not want to go back to work immediately, and I would like to leave this option open.

I also have a taxable account with approximately 16K in it. I would like your opinion on whether I should liquidate this account to effectively put it into tax advantaged space (by using this money as income, and deducting more from our salaries to contribute to our 401Ks), or if perhaps we should simply set it aside in savings to prepare for the baby/unexpected expenses/wife not returning to work?

I will be happy to provide any additional details. Looking forward to your responses.
riggle - Feel free to start a new thread about the "other" aspects of preparation (food, clothes, etc.) in the Personal Consumer Issues forum; you'll get plenty of advice. :)
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Re: How to [Financially] Prepare for a Baby

Post by riggle » Wed Apr 15, 2015 7:57 pm

Thank you all once again for such great advice. A special thank you to jimday82 for sharing such a personal experience. I don't know if there's any way to prepare for postpartum depression, but we will do our best to talk about this possibility over the coming months.

Also thank you to LadyGeek for helping to refocus this thread. While I really do appreciate all the advice on ways to save money on baby/toddler goods (and I will definitely continue to reference your posts as time goes on), I'm most interested in the financial planning aspects. As everyone has pointed out, there are many aspects of having a baby that will be completely out of our control, but hopefully the finances will be something that we will be able to feel confident about.

Cheers to you all :beer

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Re: How to [Financially] Prepare for a Baby

Post by LadyGeek » Wed Apr 15, 2015 8:15 pm

The wiki has a financial checklist ready to go: Financial planning

"Step 1, Establish Goals" is complete. OK, with "prepare for baby" as your goal, run down the list and start filling in the details. You may need a spreadsheet.*

* If you don't have MS Excel, download Calc | LibreOffice - Free Office Suite.
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Re: How to [Financially] Prepare for a Baby

Post by minneapples » Thu Apr 16, 2015 9:21 am

Two main suggestions. First, regardless of what your family plans to do for childcare, those childcare plans will have a big effect on your finances after baby. Daycare can be extremely expensive (mine is more than my mortgage payment, and that it typical for my area). On the other hand, going from two incomes to one means (1) losing income and (2) a greater reliance on the earnings of the still-working spouse. If that were what my family were doing, I would definitely be increasing my accessible aavings, because losing one income means losing all income. The risk/downside increases a lot when you don't have that second income as a buffer.

Second, unless you have particular medical concerns that require OB/hospital care from the outset, I would investigate midwife care and in particular non-hospital prenatal and birth options. If that makes you uncomfortable to think about, do a little reading and see if your concerns are eased. The safety stats for low-risk pregnancies receiving certified nurse-midwife care, whether in hospital or in an accredited out of hospital setting are fantastic, and this model of care often provides a more supportive and pleasant environment for the birthing family. They are also significantly less expensive (by 50-80% less, for the options I personally have compared.). Home births are another option on which options, though research and opinions about home birth safety are more vigorously divided, but the absolute safety risks are undisputedly quite low in any event. And a competent provider will know if and when hospital/OB transfer becomes necessary. The most important factor of course is what your wife is comfortable with, as that will have a huge effect on her experience (and yours). But it is something to think about.

And I give this suggestion as a woman who had one baby with midwives in a hospital setting and is expecting the current #2 to be born with midwives in a freestanding birth center or with a CNM at my home. Finances were not the primary driver in my decision, but they are a supportive factor in that decision. I have good insurance, but because separate deductibles/OOP maximums applied for me and #1, I paid $8k out of pocket with him. The birth center will be $2.5k for more individualized care by nurses with the same qualifications. A home birth would be somewhat more than that because that CNM is out of network but would be no more than $4k, and may be desirable for other reasons. TBD.

Compared to birth costs and child care (whether day care or the reduction in income/income diversity wishbone parent staying home) the rest of it -- clothes, diapers, gear, etc -- is chump change. You can do those things cheaply (and probably will, in true bogle head fashion) but the potential financial impact still will be smaller than those two factors I mentioned.

Many congratulations to you and your wife! You are beginning a grand, lifelong adventure together.

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Re: How to [Financially] Prepare for a Baby

Post by DDMP20 » Fri Apr 17, 2015 8:22 am

I'd like to point something out about childcare.

While it usually is very expensive and many frequently try to minimize or completely avoid the costs associated with it, it does have some positives if you place your child in the right environemnt. I have noticed with my own children, who only go to daycare two days a week, that being around a number of other, different, children has been beneficial to their emotional, social and cognitive development. I'm not saying that kids who stay at home with mom or dad are going to have their development stunted but there is definitely a benefit to a child's development in a number of ways when placed in a suitable daycare so it's not like you should look at that cost as all bad.
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Re: How to [Financially] Prepare for a Baby

Post by JimmyD » Fri Apr 17, 2015 8:27 am

DDMP20 wrote:I'd like to point something out about childcare.

While it usually is very expensive and many frequently try to minimize or completely avoid the costs associated with it, it does have some positives if you place your child in the right environemnt. I have noticed with my own children, who only go to daycare two days a week, that being around a number of other, different, children has been beneficial to their emotional, social and cognitive development. I'm not saying that kids who stay at home with mom or dad are going to have their development stunted but there is definitely a benefit to a childs development in a number of ways when placed in a suitable daycare so it's not like you should look at that cost as all bad.
+1. I agree 100%. Socialization with peers at a young age is crucial. I'm happy to pay the cost and look at it as an investment in my son's well-being.

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Re: How to [Financially] Prepare for a Baby

Post by DDMP20 » Fri Apr 17, 2015 8:51 am

jimday1982 wrote:
DDMP20 wrote:I'd like to point something out about childcare.

While it usually is very expensive and many frequently try to minimize or completely avoid the costs associated with it, it does have some positives if you place your child in the right environemnt. I have noticed with my own children, who only go to daycare two days a week, that being around a number of other, different, children has been beneficial to their emotional, social and cognitive development. I'm not saying that kids who stay at home with mom or dad are going to have their development stunted but there is definitely a benefit to a childs development in a number of ways when placed in a suitable daycare so it's not like you should look at that cost as all bad.
+1. I agree 100%. Socialization with peers at a young age is crucial. I'm happy to pay the cost and look at it as an investment in my son's well-being.


Not to veer too far from the OP's origianl inquiries about financial preparation for a child but I think that as a first time parent the OP would appreciate any and all advice about parenting those of us who are parents have to offer. I'm a parent, not a child psychologist, pediatrician or childhood development expert but ensuring that my children's development is healthy and optimal is something that I take very seriously. I've done a fair amount of reading/research into the subject and I've come to the conclusion that most parents probably underestimate how crucial it is to stimulate their child's development starting at birth. Human interaction is number one. From birth it's so vital to interact with your child and let them interact with others as they get older. It's also important to minimize the televison vieiwing while they are very young. Instead they should be read to and reading themselves, playing games that require logic and motor skills etc etc etc

I also recommend giving your children [OT medical advice removed by admin LadyGeek] Do the research and ask your pediatrician.

Don't get me wrong. I'm not one of those parents who expects my kid to speak seven languages by the age of 6 or be writing violin concertos by age 10. It's all about balance. Of course kids needs to be kids and act silly and play a lot. that is also crucial in healthy development.

What others can describe to you but what you won't fully understand until you become a parent yourself is what it's really like and how your life is truly not your own anymore. Your job and mission in life is now to be the best parent you can in every way possible.

I apologize if this post has come off a tad preachy or patronizing but I often see parents who don't put the needs of thier kids before their own and it's upsetting.
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Re: How to [Financially] Prepare for a Baby

Post by LadyGeek » Fri Apr 17, 2015 10:12 am

I removed coments related to nutritional supplements, which constitutes medical advice and is off-topic. See: Forum Policy
Medical Issues

Questions on medical issues are beyond the scope of the forum. If you are looking for medical information online, I'd like to suggest you start with the Medical Library Association's User's Guide to Finding and Evaluating Health Information on the Web which, in addition to providing guidance on evaluating health information, includes lists of their top recommended sites in the following categories: consumer health, cancer, diabetes and heart disease. They also provide a larger, but less frequently updated, list called Top 100 List: Health Websites You Can Trust.
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