MONEY

Baby on the Way? Time to Make a Budget

Congratulations! There is nothing quite as exciting as having your first child — or as expensive.

Assuming your household earnings exceed $105,000, your precious bambino will set you back nearly $400,000 by the time he reaches age 18, the U.S. Department of Agriculture reports.

Then you’ll probably end up paying big, big bucks — gulp! — for baby’s BA.

Fortunately, while you can’t prepare for the sleepless nights ahead, there’s a lot you can do to get ready financially for the newest member of your family.

 

THE TURNING-POINT CHECKLIST

First Trimester

Make a post-baby budget. Disposable diapers alone can run $900 the first 12 months. Figure out what other costs to expect with the First-Year Baby Costs Calculator at BabyCenter.com.
Investigate child care. It’s often the biggest line item, with day care averaging $4,900 to $16,400 a year depending on location. One of you planning to stay home? Account not just for loss of pay but also for perks like 401(k) match.
Sew up a cash cushion. Start knocking away credit card debt and aim to bank at least three months’ living expenses — more if only one of you will work.
Estimate health bills. In a typical employer-sponsored health plan, prenatal care and delivery cost a patient $2,244. Contact your insurer to see what it will cost you so that you can plan for the outlay.

Second Trimester

Protect your paycheck. Use the tools at lifehappens.org to estimate your life and disability insurance needs. Term life will be most affordable. See if you get disability through work before buying.
Make a will. You’ll need one to appoint a guardian. Get it made now — you can DIY with software like Quicken WillMaker Plus ($43) — while you have time. No need to know the name of your offspring.
Check your benefits. Only 16% of companies offer paid maternity leave. Want to take time off without pay? Be sure you have savings to cover expenses.

Related: How to Tell Your Kid You Can’t Afford Her Dream College

Last Trimester and Beyond

Get the gear. Talk to other parents about what you need — and don’t (e.g., a wipes warmer). Ask your BFF to throw you a shower. Register to avoid repeat gifts.
Set up a 529 …and deposit any cash gifts. All 529 plans offer tax-free growth and withdrawals for college, and many states let you deduct a portion of contributions.
Enroll baby. You have 30 days after the little one’s birthday to put your child on your health plan and to sign up for flexible spending accounts that let you save pretax for health care and dependent care.
Celebrate your tax break. In 2014, the exemption you get for having a child is $3,950. Use the Withholding Calculator at irs.gov to see if you can reduce what you’re paying to Uncle Sam each paycheck.

Related: Ace Your Annual Review

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