Here's What it Costs to Have a Baby in 2023
Having a baby is an incredible life experience, but it also comes with significant financial overhead as well. A recent study detailed that the delivery of a child can cost nearly $20,000, with the estimated post-insurance costs hovering around $2,800. In the case the birthing parent may need fertility treatments, the cost can quickly skyrocket into the five-figure range.
The figures also don’t include any costs such as clothes, food, diapers or follow-up medical appointments. And if you add in missed time from work — the costs can continue to compound.
So if you’re planning on having a baby in 2023 or in the near future, it’s imperative to have a financial plan in place. Once you have your plan, you can focus on the most important part — bringing a new life to the world and being the best parent you can be.
Here are five ways you can financially prepare to have a baby.
Understand your health care coverage, and expected out-of-pocket expenses
If you have health care insurance through your employer or through the Healthcare Marketplace, it’s best to research what your coverages are. You will need to look into what your deductibles are, what is covered/not covered, and your maximum out-of-pocket maximum to understand what you will be required to pay out of pocket.
If you don’t have active health care coverage, paying out of pocket could be extremely costly — so it’s recommended to have a policy in place before becoming pregnant.
Crush any outstanding debt before-hand
Bringing a baby into this world is a stressful experience as it is. Adding financial stressors like recurring debt is the last thing you should be worried about.
But if you’re struggling with debt, you aren’t alone. The average American currently has over $5,000 in credit card debt, not including other debts like auto loan debt. But the good news is that there are proven ways to get out of debt. Here are a few different strategies:
- Snowball method: Paying off debt is half-money and half-psychological. And just like a snowball becomes bigger and has more momentum as it rolls downhill, you can pay your debts off in the same way. For this strategy, you will list out all of your debts from smallest to largest. Regardless of the interest rates on each one, work on paying down the smallest one first. Once that first one is done, take that same effort and apply it to the next one. It isn’t the cheapest way to pay off debt, but it works for many.
- Avalanche method: This method leans more into math than psychology. The avalanche method includes listing out your debts from smallest to largest with their interest rates. Instead of paying the smallest debt first, you will pay down the one with the highest interest payments first. This method will save you money in the long run, but some find it harder to get started if the initial debt is large.
Build your emergency fund and savings
There are expenses that will come up quickly with having a child that may not even cross your mind now. But as you have necessary and immediate purchases for your new little one, avoiding financial freefall by building up your emergency fund and savings is imperative.
That’s why Current offers Savings Pods, where you can separate parts of your Save account for different purposes. And as you save, you will earn up to 4.00% APY on your balance — which is 15x higher than the national average.
For your emergency fund, it’s standard to save between 3-6 months worth of living expenses. This can be separated for things like unexpected car expenses, loss of income, home repairs or other unforeseen circumstances.
For other baby-related expenses, you can start a Savings Pod for upgrading the little one’s room, buying a larger family vehicle, a baby monitor and other things to help make parenting a bit easier.
Check-in on your retirement savings
Your mind may be on fun new expenses and experiences, but don’t forget to have a self-check-in with yourself and your partner on where you two are headed.
If you’re currently saving for retirement through an employer-sponsored plan like a 401(k), consider if your new adventure of parenthood may need to take priority for the time being. If you’re able to continue contributing to your retirement, consider also opening up a Roth IRA and/or a Health Savings Account (HSA).
Additionally, once your child is born, you can choose to list them as a beneficiary on your retirement accounts in case something happens to you.
Create or adjust your will
Creating a will is an easy thing to put off — no one wants to plan for their eventual death. But it’s a necessary protection for you and your family.
Not only will it protect your financial assets, it can also give directives regarding your posthumous wishes — including who takes custody of your child if they are still a minor if you pass.
And you don’t have your will or trust anything robust, and it doesn’t need to cost a significant amount of money. You can find free templates online, and the only thing you need to do once it’s completed is have the document notarized — which you can also have done for free. Once it’s completed, be sure to put it in a secure place where it can be found.
Current is a financial technology company, not a bank. Banking services provided by Choice Financial Group, Member FDIC.
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