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The Suburbanite
  • Budgeting for Baby: Financial advice

  • What to expect (financially) when you are expecting. Local moms and financial counselors offer tips to parents-to-be.

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  • (Part 1 of 2-Part story)
     
    It may not be as much fun as shopping or showers, but pregnant couples should set aside time to review their finances.
    Thrivent Financial for Lutherans, a fraternal benefit society, recommends expectant parents reevaluate their budget, insurance, disability coverage and health care. A list of financial tips at www.thrivent.com includes these suggestions:
    1. Get disability coverage if you don’t have it.
    “Being disabled through illness or injury is much more likely than your house burning down, yet everybody has house insurance,” said Kathy Smith, an associate with Thrivent’s Malvern office.  
    Be sure your current disability insurance is enough to provide for your soon-to-be-larger family if you or your spouse cannot work. If not, Thrivent suggests purchasing additional coverage through your employer or on your own.
    2. Look into a Flexible Spending Plan (FSA).
    You may be able to direct a portion of your pre-tax wages to an account from which you can draw reimbursement for child care costs. As a bonus, you’ll have less taxable income after channeling money into the FSA, so you’ll pay less in taxes.
    “If your employer doesn’t offer an FSA, you can go to Thrivent Financial Bank or any bank for a health savings account,” Smith said. “The health savings account is for people who have high-deductible plans. But shop around — banks have fees.”
    3. Track your pre-baby spending habits. Identify expenses that can be pared or eliminated to accommodate the new addition to your budget. Smith said this step takes some discipline.
    “People have to be willing to track spending for a month and gather documentation, then we enter it into our computer program,” Smith said. “I worked with a young family with two children and did this for them and she said, “This is wonderful, I had no idea where all our money was going.” It was really eye-opening.”
    When you create your new, post-baby budget, remember to include increased medical costs, from delivery to well-baby checkups.
    4. Discuss pros and cons of one parent staying home with baby. Calculate how the loss of income would affect the family budget.
    “Record what you’re spending now, add in what you’ll be spending — diapers, formula, clothes — and ask, can you afford to stay home?” Smith said. “Then ask if it’s worth going to work when you’ll be paying for child care, gasoline, eating lunch out. Weigh one against the other.”
    5. Consider additional life insurance. Thrivent recommends coverage equaling between 5 and 10 times the parents’ annual salary to cover the child’s expenses, including education.
    Page 2 of 2 - 6. Shop early. Spread out major purchases — crib, car seat, stroller — throughout your pregnancy to avoid a budget crunch in the ninth month. This also allows you to take time to comparison shop and find items on sale.
    Although previously just for Lutherans, Thrivent membership has been open to anyone since 2009. You can become a member by buying a product, such as insurance or a mutual fund, or by paying a $19.95 membership fee. Financial counseling, such as mentioned in #3 above, is free. For a list of local offices, visit www.thrivent.com.