(Financial) Baby steps

Have you ever heard the saying that “babies don’t come with owner’s manuals”? It’s true that no matter how many books you read, classes you take, or experienced parents you talk 
to, you can never be completely pre-pared for the challenges and joys of 
parenthood. You can, however, prepare yourself for the costs of a new baby — by looking after your finances before your bundle arrives.

New parents don’t always prepare for the expenses associated with having a baby. One survey by Redbook Magazine and VISA in the United States found that less than 50 per cent of expectant parents create a new budget that includes baby expenses. And while 76 per cent of parents-to-be felt financially prepared for a baby after the tyke arrived, 41 per cent of new parents said they weren’t as 
prepared as they had thought.

Taking steps like clipping coupons and buying second-hand clothes can help new parents save cash, but other important financial considerations — such as protecting their credit scores — require advanced planning. Here are some tips to help expectant and new parents to look after their finances:

Before the baby arrives

• Review your health insurance and what it covers. The full costs of pre-natal care, maternal care and delivery are not always covered by all insurance plans. As soon as you know you are pregnant — or when you make the decision to conceive — contact your insurer and ask for a 
detailed explanation of benefits. The Redbook survey found that unexpected hospital costs — things that couples thought their insurance would cover — cost one in four new parents more than $2,000 from their own pockets. Knowing what’s covered, and what’s not, can help you determine how much cash to set aside for hospital expenses.
• Review your credit. One way or ano-ther, you will be spending money — a lot of it — when the new baby arrives. Whe-ther you need to tap credit to buy nursery furniture or need a good credit score so you can get a better auto policy that costs less, it’s important to understand this aspect of your financial well-being.

Enrolling in a product such as freecreditscore.com can help you understand your credit score and status, which can help you make informed decisions about how you will use credit during this potentially financially challenging time as new parents.

• Create a spending plan. Your overall spending plan should not only include a budget for day-to-day costs like diapers, but a long-term plan for larger expenses such as nursery furniture, day care, and college savings. It’s important to estimate not only how much you’ll spend but when you’ll spend it, too. For example, your short-term budget may include the cost of a crib — an item you will need immediately — but you may be able to postpone other furniture purchases like a dresser or changing table.

When you’re new parents

• Buy wisely and frugally. From clipping coupons to buying off-brand names or purchasing from discount stores, it’s possible to equip your baby with everything he or she needs at a fraction of 
the cost of buying brand new, brand-name retail products. It’s normal to feel pressured to buy new, top-of-the-line luxury items for your baby, but used items and off-brand products can be just as good. Check out online ratings for a used item’s durability before you buy it, and see what other consumers have to say about cheaper brands of diapers, baby wipes and clothing.
• Continue to keep an eye on your 
credit; it’s a key element of your financial health. Good credit directly affects your ability to buy that bigger house you need as Junior starts to grow, get an auto loan for a minivan, or secure a new job in some cases. The Internet can help. For example, freecreditscore.com offers a Score Planner that lets members and non-members see for free how their 
financial behaviours can affect their credit scores.

While nothing can really prepare you for the agony of sleepless nights with a newborn, or the joys of seeing your baby take his or her first steps, it is possible to prepare for the financial responsibilities associated with becoming a parent.

BPT