National Parents’ Day: Preparing for a Newborn

National Parents’ Day recognizes the important role parents play for their families and communities. This year, in honor of National Parents’ Day on July 28, we’re taking a closer look at the financial considerations of being a new parent. From baby budgeting to insurance coverage to guardianship and more, here’s some financial food for thought if you’re preparing for a newborn.

Budgeting for Baby

Experts estimate that the first year with baby can cost around $21,000—but before you get sticker shock, keep in mind that plenty of parents do it for less. If cost is a concern, shop for baby products at thrift stores and check out secondhand listings online. Summer is also an excellent opportunity to visit garage sales, where families are often eager to clear out their baby supplies at a good price.

Whatever your shopping style, budget ahead for nursery furniture, a car seat, baby carrier, formula and/or breastfeeding supplies, and of course, diapers. On the other hand, be wary of overspending on clothing that looks cute but will quickly become a size too small.

All About Insurance

Some insurance plans automatically provide maternity care insurance, which helps to cover prenatal doctor visits and screenings, hospitalization including delivery, and additional care such as breastfeeding coverage. If you’re trying for a baby or already pregnant, it’s a good idea to touch base with your current insurer as soon as possible to understand what’s covered.

Your insurance company can also explain what to expect after baby is born. Adding a newborn to your insurance policy should mean that you are covered for pediatrician visits and vaccinations—but check what deductibles and copays you’ll be responsible for paying. Depending on the price of your premium after adding pediatric coverage, it may be worthwhile to shop around for a new insurance policy.

If you don’t have insurance, or you’re on a plan that doesn’t cover maternity care, visit www.healthcare.gov for options. You may also qualify for Medicaid, the state and federal government program that helps people access low-cost insurance. All Medicaid plans cover pregnancy and childbirth.

Estate Planning and Guardianship

With a new baby on the way, it’s critical to create a will or update your current estate plan. In your will, you can designate a guardian so that if something happens to you or your partner, it’s clear who will receive your assets and care for your children.

Now is also a good time to review beneficiary designations on retirement accounts, life insurance policies, and bank accounts. If you’re a Harvard Federal Credit Union member and want more information about creating a will or designating a power of attorney, check out Harvard FCU estate planning resources online.

Emergency Savings

When it comes to raising kids, expect the unexpected! That’s why it’s a good idea to have an emergency savings account. The experts recommend keeping three to six months' worth of living expenses in a separate account, so you’re ready to cover unexpected medical care, unemployment, or other financially challenging surprises.

Because a new baby brings a new crop of expenses—from everyday care to college savings—it can be tempting to forgo an emergency account. Keep in mind that having at least some funds stashed away for a rainy day can help to avoid high-interest loans or credit card bills in the future. Saving a little bit every month in an emergency fund is an investment in your growing family’s future. Click here for a few tips on how to get started!