Being a new parent is an exciting and overwhelming time — there’s so much to learn about navigating this major life event. One of the most stressful parts of having a new baby may be learning how to manage and afford their health needs, including prenatal and birth care, regular checkups with a pediatrician, medication, formula and, if necessary, emergency care, among other costs.
If your little one’s health care costs are more than you can afford on your own, a medical loan could help you bridge the gap. A medical loan lets you borrow a lump sum of money that you pay back over time in predictable monthly payments with a set payoff date for easier budgeting.
Keep reading for some more ways new parents can budget for their baby’s health needs.
Review your monthly expenses
First, you’ll want to get a better sense of how much you’re spending and how you might shift your expenses to cover your baby’s needs. Write down all your expenses over the past few months so that you can more clearly see where your money is going — using a spreadsheet or mobile phone app could be a simple way to track this information.
Once you have everything in one place, create categories, such as food (groceries and dining out), commuting costs (gas and tolls), utilities (phone and electric bills), housing costs (rent and mortgage) and savings. Seeing how your spending compares across categories may help you see whether there are any nonessential expenses you could allocate money to your baby’s needs.
Rethink your purchases
It’s tempting to buy a lot of new items for your baby, but if your budget is tight, consider buying some items secondhand or using hand-me-downs where possible, say for a stroller, crib or clothing. Of course, you’ll want to make sure the items are clean, safe and working properly before you use them, but you could save a substantial amount of money this way.
Consider your budgeting method
Once you have a better sense of your expenses, you may want to reconsider how you approach your monthly budget to ensure you’re reserving enough funds for your baby’s needs. Here are a few methods to try:
· 50-30-20: Put 50% of your budget toward your needs (rent and utilities), 30% toward wants (entertainment and gym membership) and 20% toward savings. These percentages can shift slightly if need be.
· Zero-based budgeting: At the beginning of the month, assign a role to every dollar of your income until you get to zero. This method could be helpful if your income fluctuates — you could change the amount you put toward different expenses each month to afford your baby’s health needs.
· Envelope system: With this method, you put cash into marked envelopes for smaller monthly expenses, such as dining out with friends and seeing a movie on the weekend. The amount in the envelope is how much you may spend in that category for the entire month.
Create a separate savings account
Before your baby arrives, it may be helpful to set up a separate savings account that will only be used for your baby’s health needs. Once you’ve reviewed your monthly budget, you can decide how much to regularly deposit in the savings account. Setting aside even $20 per month could help you cover some of the co-pays for all those check-ups your baby will have during their first year.
Setting up direct deposits from your checking to your savings could be another way to make sure you consistently contribute to your baby’s account. If your employer lets you directly deposit your paycheck into multiple accounts, you might also automatically direct a certain amount of each paycheck to your baby’s health savings account.
Check your health insurance
If you have health insurance, it’s important to understand your specific plan and the type of coverage it may provide for your baby, including regular checkups and emergency care. Check with your insurance provider to familiarize yourself with your plan’s in-network and out-of-network costs, and, if one is available, use your provider’s cost estimator to determine how much will be covered for specific health needs so that you have a clear sense of how to prepare financially.
Start budgeting ahead of time for your baby’s needs
If you’re able to afford it, it could be helpful to start budgeting for your baby’s health needs ahead of time by reviewing your monthly expenses, reconsidering how you budget, setting up a dedicated savings account and figuring out which costs your insurance will cover. That way you’ll have some funds already set aside when your little one arrives.
Taking steps to prepare financially and ensure you can afford your baby’s health needs to the best of your ability could help you feel less overwhelmed and more prepared for the years ahead.
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