Is anyone ever truly financially ready to have a baby? Many people start with good intentions but lose these in the excitement when the baby is on the way.

Budget, Budget, Budget

It’s easy to become overwhelmed—you want your baby to have everything, and those tiny clothes are so cute, what harm could it do to buy some more?

If your baby preparation is on the verge of wiping out your pre-baby budget, it’s time to slow down.

A word to the wise: babies cost more than you think.

You’ll spend more on diapers, food, and many other items than you realize. Good schools are expensive. The time to start saving is now.

That $10 baby outfit will fit your child for a few weeks at most, but if you invest the $10 for twenty years instead, it’ll be worth $14.91, assuming an interest rate of 2% throughout.

It doesn’t sound like much, but we’ve added nothing but interest to grow your money by almost 150%. By comparison, if you wait ten years to invest, you’ll end up with only $11.27. The difference comes from compound interest, and the returns are significant.

You need to draw up a budget now, putting as much as you can into your rainy-day savings fund. Be strict in budgeting what you’ll spend on clothes, toys, and other baby items. You can start cutting unnecessary expenses and those little extras you don’t need.

It is a great time for a full financial review. Before the baby arrives, review your insurance, your power rate, and other major expenses. Shave every cent that you can without negatively impacting your cover and service.

When comparing things like the electric rate, be sure to compare apples to apples. Find a way to establish the base cost without the benefits for each service and work from there.

Baby Expenses

As an expectant parent, there are expenses that you know are coming. You’ll already have checked the price of diapers, diaper services, creche, and other necessities.

Let’s talk for a minute about those unexpected expenses, though. These are expenses that you won’t see coming until they’re on the doorstep. Unpaid leave from work because your toddler is sick is a common one. Paying higher co-payments because you had to take your child to someone outside of the preferred network is another.

Then, there’s the damage that your overeager child might do to other people’s belongings. For example, throwing up all over your boss’s suit or artistically ‘altering’ a valuable painting?

Before you start to feel stressed, these things might never happen. We’re not trying to scare you. Your toddler might never give a moment’s trouble, but there’s no way to know that in advance.

You can take steps now to deal with unforeseen expenses.

• Create a strict budget.
• Save as much as possible while you’re able.
• Make smart decisions with your money.

You could buy the stroller that costs $600, but what practical utility does that stroller offer over one that’s half the price? Don’t fall into the new parent trap of thinking that only the best (or most expensive) is good enough for your child.

Choose quality over quantity where it counts.

Is it worth spending extra on a high-quality stroller? It might be. Is it worth paying extra because the stroller has more features? Not if you don’t need those features.

Think Positive But Plan For The Unexpected

Expecting a baby is exciting and scary. You’re excited to welcome a new member of the family, and you’re scared because it’s a significant financial investment.

Give yourself one Doomsday session. The rules are simple—assign a time where you think about what might go wrong and set a time limit.

During the session, write down everything that concerns you. Once your time is up, revert to a positive mindset again.

The value of this session is that it highlights any underlying fears you might have and helps you plan well. Ignoring the fear won’t stop it from festering at the back of your mind. Getting it out in the open allows you to plan.

You will probably plan for the worst-case scenario. Is it likely to happen? No. If it does, you’ve created a plan to deal with it, which is reassuring and also responsible as an expectant parent.

Things to consider include:

• Your health care cover
• Life insurance
• Retrenchment
• Disability cover
• A will

You need to review your insurance anyway, so it might pay you to speak to a financial planning expert. They’ll be able to advise you on the best way to save for your baby’s schooling and college expenses. You’ll also receive advice on the right amount of insurance for your growing family.

An effective Doomsday session could also spark new ideas on how to earn extra money or where you can save so that you can get back to celebrating the imminent new addition.