Financial Planning for the Unplanned Little One

Photo by Daiga Ellaby on Unsplash

We’re giving you the financial answers to the questions that you’ve already asked or forgot to ask because.

You know.

Baby.

Quarantine baby? Someone didn’t social-distance properly…

Let’s dive in.

Oh, and congrats!

 

     1: How much does having a child actually cost?

The cold, hard facts: insurance typically covers all but $5,000 of the cost of delivering a baby in an in-network hospital. And this is the low end, non-complicated birth, no doula, no specialist, type of cost estimate. Beyond that, you can expect daycare to run between $15,000 – $30,000 per year, a nanny share (one nanny watching multiple family’s children) to cost between $20,000 – $40,000 per year, and a full-time nanny to cost between $50,000 – $80,000 per year. But wait, some good news: according to the USDA in February of 2020, the monthly cost of a newborn is way less expensive than the monthly cost of a teenager. So there’s that. We dive a little further into the long-term financial implications here

 

Were you considering a minivan? Keep (sc)rolling.

 

 

     2: Does my company offer maternity/paternity leave?

It’s important to have a conversation with your company’s HR department to understand what the maternity and/or paternity policies look like. If the time given is less-than-ideal for you, ask if you can use PTO to build up your time off.

 

     3: What should I be doing to get financially ready?

There are a few ways to prepare your current financial set up to make a big change. Speak with a virtual financial advisor to see if your savings can cover extra time off. With way less into-the-night wine-filled dinners or last-minute trips to the coast, typically the additional ~$500/month (think diapers, onesies, etc.) is absorbed by these buckets. Your advisor can also help you navigate using your FSA or HSA account.

     4: Understanding the “emergency fund” with a new addition –

Typically, advisors suggest having 6-12 months worth of fixed expenses covered in an “emergency” or “rainy day” fund. We recommend 3 months (and here’s why).

 

We understand that kids are wildly accident-prone knuckleheads. Who didn’t want a trampoline, jungle gym, tee ball set, to put everything in your mouth, or risk electric shock from the McDonalds slide as a toddler? But having an excess of savings could prevent you from achieving a different short-term goal. Consider moving some of your cushion over to your emergency fund to accommodate the new adorably expensive addition because those fixed expenses are about to rise. And if you don’t have an emergency fund built out just yet, this video series will help you figure out how to get started.

 

     5: How to soundproof an office –

(Kidding, but here are a few ideas of how you can share the happy news because, at the end of the day, this is happy news.)

 

 

Feel better if you had someone to speak with? Did no one tell you financial planners were also part-time therapists? It comes with the job. Schedule some time with us here

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