New Kids On The Block, Part II

If you haven’t read the first installment of this series, I encourage you to also read it: New Kids On the Block, Part I

How much does it cost to have a baby? Well, the answer can range widely. USDA says a middle-income family can expect to spend an average of $13,000 on their child per year. The cost of a newborn potentially being even higher considering maternity care, cost of delivery, postnatal care and a hospital stay.

When planning your budget, you will want to review your health insurance for several key terms.

–              Deductible is your out-of-pocket maximum you will pay for care in a given period, often a calendar year

–              Coinsurance is a percentage of the cost that you and the insurance will pay out of pocket after the deductible is satisfied. (Ie. 80/20 – Insurance pays 80% you pay the remaining 20%)

–              Copay is a flat dollar amount that you must pay for services at the time of the visit such as doctor visits or prescription drugs

–              HSA (Health Savings Account) is only available with an eligible healthcare plan. It is an account with funds often contributed directly from payroll before taxes. This account will have a debit card that allows you to pay for medical expenses not covered by your plan.

Before the baby is born, you want to fill the entire nursery with diapers and wipes. I am being facetious, but you will go through quite a few diapers and wipes, so plan to stockpile as many as your storage space will allow. Speaking of nursery, you obviously need a crib. Do not forget multiple set of sheets and a mattress for the crib. For the first few months, you will likely want the baby close to you, which means a bassinet or bedside sleeper. You will also need things like a baby monitor, bottles, a stroller, clothes, and a playpen or swing. Many of these items can be purchased with an HSA.

Remember, if you cannot pay cash for it, do not get suckered into a store credit card because of the introductory rate. Instead, borrow needed items from friends or family, watch garage sales and online marketplaces, and spend time creating a baby registry. A baby registry can do some of the heavy lifting when friends and family are looking for ways to get involved or help, so register early!

Whatever you do, DON’T FORGET THE CAR SEAT!! You cannot leave the hospital unless you have a car seat. I highly recommend you install the car seat early just in case your new loved one decides to make an early entrance into the world, like my little guy did.  Fire departments are generous in helping you properly install one, especially useful if you are a first-time parent.

Be on the lookout for Part III of this series that is coming soon!

Tim Jones

Tim Jones

Tim Jones CFP® is a Financial Planner and Vice President at BCR Wealth Strategies.