Setting your personal and baby savings goals
The best place to start when budgeting for baby is with your overall savings goals. Here, you will look at two facets: what you would save as an individual adult, and how that will change "with baby."
Note: Here, you can use the working baby budget you developed in the article, Budgeting for Baby: Building Your Budget as a go-by.
- Individual savings goals: In terms of your individual financial needs, most financial experts would advise a savings goal of 3-6 months of living expenses in a highly liquid form (such as a savings account).
- "With baby" savings goals: Now you are planning for your own needs and your new baby's needs. So here, you also need to save sufficient financial resources to take care of the first 3-6 months of your new baby's needs.
Expense variables that impact savings goals
Nationwide estimates of how much baby costs one parent or the next can vary greatly due to a number of savings variables. For instance, if you have excellent insurance benefits and a generous maternity leave policy at work, you may need to save less than another expectant parent who is self-employed and has a high deductible insurance plan.
Here’s a list of common variables to review as you set your savings goals:
- Your insurance benefits: The more your insurance pays, and the more you know about the details of your policy, the less you may have to pay out of pocket.
- Your own health and your baby's health: Here, paying very careful attention to your insurance benefits may salvage some of the extra expense associated with poor health or medical complications (example: some insurers pay for special formula due to a baby's allergies, while other insurers do not).
- Your employer's maternity leave policy: If you are employed and the company offers maternity leave, find out everything you can about the policy in advance.
- Your income: Maintaining a full-time, two-income household may or may not be realistic at least for the first year or two of your baby's life.
- Where you live: The community and region of the country you live in can significantly impact how much you spend on care, services and even groceries.
- Your expertise with bargain and coupon-based shopping: If ever there was a "right time" to become a bargain shopper and KCL couponer in earnest, having a baby on the way is that right time!