How to Afford a Baby

What is more expensive than a house yet weighs only about seven pounds? A: A baby.

Your need for life insurance changes when you add someone to the family who depends on your income. Sit down with a financial planner or trusted insurance agent to figure out how much insurance you need.

Make sure the non-working parent is insured as well so child-care costs would be covered. Term insurance (particularly 20- or 30-year level term) is your best bet. The premiums are about eight times cheaper than whole life, universal or variable insurance for the same amount of coverage.

Wills

If this is your first child, get a will or update your old will. Name a guardian for your child and the trustee of your child's inheritance (often but not always the same person). Without a will, the court will name these individuals and also split up your assets in accordance with state law which may not be the way you would wish. A simple will that includes a trust for minor children costs between $150 and $250.

Work Strategy

If you plan to return to work, review your employer's leave policy carefully. If you are eligible for coverage under the Family Medical and Leave Act, you may take up to 12 weeks of leave with continued health coverage in connection with the birth or adoption of a child. Your employer is not required to pay you while you are on leave (although you typically may use accumulated sick and vacation leave). The father may also be eligible for time off.

Check the Q & A section of www.elaws.dol.gov/fmla for additional details.

For working parents, finding good, affordable child care is probably the most stressful part of returning to the job. Study your options well in advance of your baby's arrival. The average cost of daycare is about $4,000 a year, but a live-in nanny can cost $1,000 a month. If you employ a babysitter in your home, you are responsible for paying social security taxes and withholding income taxes.

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