How Do You Prepare for a Baby, Financially?

Finding out that a baby is on the way is a delight for prospective parents. The littlest member of the family is sure to bring new parents much joy on arrival. 

At some point, however, a new found realization that both partners’s take-home pay needs to funds three sets in.

The actual cost of raising a child from birth to tertiary education can vary considerably, ranging from $200,000 to $700,000, according to a report last year. Based on internal Standard Chartered Bank estimates, the average cost of raising a child to tertiary education would be about $300,000.

Preparing for a baby comes down to three Ps: Plan, Prioritize, and Protect as early as possible.

Plan

Proper cash flow planning means estimating expenses for everything from food and clothes to health and childcare costs. If a couple is having their first child, it’s easy to underestimate, so buffering an additional 30 to 40 percent for expenses would be appropriate.

Prioritize

To pay for everything from childcare to foods and tuition, new parent may need to re-prioritize between actual needs and secondary lifestyle spending. While lifestyle expenses for dinning out or entertainment may decrease after the baby arrives.

Protect

Last but not least, couples should prepare for the unexpected. They should look out  at insurance policies that are flexible and cover pregnancy-specific risk, maternity care and the life of the new baby.

Preparing financially is one of the best things parents can do to make sure they are ready for a baby. After all this planning is done, it is time to sit back, relax and wait for the baby to arrive.