Plan for Your New Expenses
Before the baby arrives, anticipate how much he or she is going to add to your monthly budget. "The best and most simple way to prepare for a new addition to the family is to plan ahead," says Sheri Provost, coauthor of CashCow Kids: The Guide to Financial Freedom At Any Age. "Identify what additional expenses you will incur with the new baby."
But how do you know what expenses your new baby will bring to your family? "Talk to your friends to find out what their monthly baby expenses are," suggests Dave Ramsey, author of The Total Money Makeover: A Proven Plan for Financial Fitness. Price out the actual costs of items such as diapers, formula, and baby food in the stores. Estimate how much you will use per month. Add in costs for clothing and toys, and don't forget the expense of childcare if both parents will be working outside the home.
Plan for the larger costs as well—such as a child's furniture,—by saving money in advance to pay for those purchases. While these large items may seem like the ones that will you hit you the hardest, many parents found that not to be the case. "The big costs didn't surprise me—I'd researched those," says Michele St. Martin of Willmar, Minnesota. "It was the little ones. Diapers and clothes are expensive."