One parent may decide to reduce work hours, job-share or even resign when the baby arrives. This requires some additional planning and close attention to your budget to accommodate the loss of income. Your employer might grant a leave of absence or allow you to work at home while you adjust to your new status as parent.
Taxes and Savings
A new baby brings some tax breaks that can put a small dent in that hefty price tag. The additional exemption and new child tax credit will save a middle-income family about $1,300 per year in federal taxes. The childcare tax credit can save $480 in taxes for the typical family, but you'll probably do better by running the expenses through your employer's flexible spending or cafeteria plan.
Outfitting a nursery can be a temptation to overspend. Saving $25 or $50 a month while you are expecting and searching for good used baby furniture (as long as it passes safety standards) can ease the strain.
- Check that your health insurance covers maternity and baby care
- Make sure pre-existing conditions are covered
- Get disability insurance before you're pregnant
- Make sure the non-working parent is insured
- Get a will or update your old will
- Figure out how much life insurance you'll need
- Review your employer's leave policy
- Investigate child care and flexible work options
- Be aware of tax breaks for children