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Budgeting for Baby

Health benefits, wills, life insurance and other child-related costs

Oh baby … the expenses to have that little one can add up big. One of the most obvious  — diapers — can cost over $1,200 a year! But there are more costs to think about, like health benefits, childcare … and gulp ... college. Get some baby budgeting tips here.

Your baby budget checklist

  • Use hospitals and doctors in your health planhealth plan
    A health plan that you buy or that is provided by your employer. It pays for health care services. I... more
    networknetwork
    Also called "provider network." A panel of physicians, hospitals and other health care professionals... more
  • Save on health costs with an FSA or HSA
  • Ask about maternity leave
  • Get life and disabilitydisability
    A physical or mental impairment that substantially limits one or more of the major life activities o... more
    insurance
  • Create a will
  • Save for the future

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Know what your health plan pays

You’ll be using your benefits a lot over the next 9 months. So now’s the time to learn exactly what your health planhealth plan
A health plan that you buy or that is provided by your employer. It pays for health care services. I... more
covers — and what you’re expected to pay.

  • How much are routine visits to your ob/gyn?
  • Are you required to choose a hospital or ob/gyn in the networknetwork
    Also called "provider network." A panel of physicians, hospitals and other health care professionals... more
    ?
  • How much will you pay if you go out of networknetwork
    Also called "provider network." A panel of physicians, hospitals and other health care professionals... more
    ?
  • Does your pharmacy plan cover prenatal vitamins?
  • What is your copay or coinsurancecoinsurance
    The portion of the cost of medical services that you pay for, after you first pay any deductible you... more
    for delivery (vaginal and cesarean)?
  • Are doula, midwife or lactation consultant fees covered?
  • Are adoption costs covered?

Visit your plan’s website. Dig through your plan paperwork. Or call a rep from your health planhealth plan
A health plan that you buy or that is provided by your employer. It pays for health care services. I... more
and ask away. Just get the facts on your medical costs — before you go for care.

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Trimming your budget to make room for baby

The image of your child all grown up might seem far away. Still, it’s a good idea to start saving for their major milestones, whether its daycare, their first car, trade school or college abroad.

And your milestones, too. Think of those big-ticket items you pay for now — home, car or health benefits. They’ll also grow bigger as your child grows.

Try cutting back in small ways. Carpool. Clip coupons. Or make your coffee at home instead of buying it out. Every penny adds up. Now put it in a savings account — and vow not to touch it! If you have a financial planner, meet with him or her to work on a new family budget.

When you start saving today, you have less to invest later — since your money gains interest over time.

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Taking maternity leave from work

Many companies offer generous maternity leave policies. Ask your employer or human resources department about yours.

Some questions to get you started:

  • How many weeks off do I get with full pay?
  • How many unpaid weeks off am I eligible for?
  • Do you offer help for adoption costs?
  • Do you offer wellness programs or breastfeeding support on site?
  • Is my child eligible for any dependentdependent
    A child or spouse who gets health insurance coverage through your plan. Often times there are limit... more
    benefits, like doctor visits, vaccinations or immunizations?

Be prepared to talk with your boss about work arrangements, including your return. And brush up on the law, too. If you work at a company of 50 or more people, you’re entitled to up to 12 weeks unpaid leave for childbirth or adoption. It’s called the Family and Medical Leave Act (FMLA). You can also read more about the Pregnancy Discrimination Act here.

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Your child brings you joy — and tax breaks

Of course, babies don’t work. But they do help you out on taxes! So get a Social Security number for your child as soon as possible. This number entitles you to many tax benefits that will help with some of your child-rearing costs.

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Look for savings built in to your benefits

If you’re in the market for benefits — or reviewing the benefits you have — look out for options that help you set aside tax free dollars for future expenses. Some examples: 

  •  Flexible Spending Account (FSA)Flexible Spending Account (FSA)
    A FSA is an account tied to an employer-sponsored health plan. It can be used to pay for medical exp... more
    . Use this to pay for out-of-pocketout-of-pocket
    Amounts such as copayments and deductibles that an individual is required to contribute toward the c... more
    health expenses during the year like copays or breast pumps. Carefully contribute, though. At the end of the year, you’ll lose any money you haven’t used.
  • DependentDependent
    A child or spouse who gets health insurance coverage through your plan. Often times there are limit... more
    care FSA. With this FSA, you can save money tax free to pay for daycare or caretaker services while you are working.
  • Health Savings Account (HSA)Health Savings Account (HSA)
    This savings account allows people to pay current health care costs or save for future expenses. To ... more
    . Here, you can save tax money on all your health expenses today. Or save it up to use for health care expenses in the future. And it grows interest.

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What if you weren't here?

It’s tough to think about it. But if you die or get hurt, you’ll want to protect your child financially. So make plans today for tomorrow’s what ifs. Then get back to the joys of parenthood — without these kinds of worries.

Your to-do list:

  • Life insurance. Buy a policy today. Or if you already have one, review it. Do you have enough coverage to protect your growing family?
  • DisabilityDisability
    A physical or mental impairment that substantially limits one or more of the major life activities o... more
    insurance.
    Could you get hurt in your lifetime? Would you still need money? If you answered “yes,” then you need disabilitydisability
    A physical or mental impairment that substantially limits one or more of the major life activities o... more
    insurance. If you have a plan, make sure it can fully cover your expenses.
  • Wills. Get one, or review the one you have. In it, name a guardian for your child in case something happens to you. And if you have assets like real estate or financial investments, think about setting up a trust for your child. If your child is young when you die, a trust will manage these assets for them.

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