What to do when you’re expecting

If you have not heard yet, my wife Rebecca and I are expecting our first child in early October. Wahoo!

Here’s what to do before and after the baby arrives:

Before We Found Out

Health Insurance

• Having a baby can be expensive. During Rebeca’s open enrollment, we began to look into all the different coverages and how having a baby would impact our out-of-pocket expenses. We ended up deciding to get a little better health insurance for Rebecca as our out of pocket expenses would be less if she did end up getting pregnant. Also, be sure to review your coverage to ensure you understand if the doctor and hospital you choose to deliver at are covered and any out-of-pocket expenses that you may incur. Once you know your medical benefits for a pregnancy, you’ll also want to make sure your child is covered after birth. With all insurance plans, having a baby qualifies you for a Special Enrollment Period (SEP). You can enroll or change your health insurance coverage even if it’s outside the open enrollment period to get your new baby covered. The coverage should take effect as of the baby’s birth date.

Short Term Disability

• Rebecca’s employer offers Short Term Disability, so during her open enrollment in December, we enrolled her into this program. As long as she was not pregnant at the time she enrolled, we will be able to collect a portion of her salary (in addition to NYS disability) while she is out on maternity leave. If you are thinking of starting or growing your family, be sure to check out your employee benefits to see what they offer and how it may help you. If your employer doesn’t provide a Short Term Disability option, you might be able to obtain independent disability insurance. Most companies do require some time between starting the policy and getting pregnant. In the end, timing is everything. If it ends up taking longer to get pregnant while paying into a Short Term Disability plan, you may wind up breaking even or losing money. If you get pregnant early into making payments, you may come out way ahead.

Health Savings Account

• Since we thought we would have some significant medical expenses in the next year or two, both Rebecca and I maxed out our Health Savings Accounts (HSA) for last year and will max them out again this year. Health Savings Accounts let you contribute pre-tax money and withdraw the money tax-free to pay for medical expenses. The best part is that there is no “use it or lose it” penalty on HSA’s like Flexible Savings Accounts has.

After We Found Out

Life Insurance

• No one likes to think about worst-case scenarios. If you feel talking about the need for life, insurance is too morbid during this happy time, flip your mindset. Remind yourself that taking out the right amount of coverage is critical to protecting your child no matter what happens. Term life insurance is the most cost-effective option. Even stay-at-home moms and dads need life insurance – if something happens to a stay-at-home parent, a working parent will need additional financial support.
• Rebecca got life insurance for the first time, and I increased the amount of coverage I have. We ended up getting 30-year term insurance of $1,000,000 for Rebecca and $2,500,000 on myself. For more on Life Insurance, please read this post, www.stevenwitter.com/life-insurance.

Nursery

• We finally got around to painting the guest bedroom that is now going to become the nursery. We still have to furnish it, which will be an added cost, but at least it is ready for now.

Savings

• Everything I have read has said that a baby costs about $1,000 a month. So we wanted to start living on our post-baby budget now so we can ease into our new lifestyle. We started a savings account and contributed a $1,000 a month to it. Yes, this means less dining out, vacations, clothes, etc., but it is a lot easier to cut back on these things when you know it is for your child.

Childcare

• Begin to look into and thinking about childcare. Does one of you plan to stay home with the baby? Will a family member volunteer to watch the baby? Will you have to use daycare or some combination? Depending on what daycare you like, some can be very hard to get into, so you may need to claim a spot on the waitlist well before the baby arrives. One of the most significant expenses I see for new parents is easily daycare. They can cost between $800 to $2,000 a month and feel like second mortgage payment!  Start preparing yourself for this potential increase now by saving.

Retirement Savings

• With a baby on the way, it’s easy to become distracted by the costs ahead and be tempted to cut back on your retirement savings, but it’s essential to stay the course with saving for the future. We decided to keep our retirement savings the same, which feels like a win!

Basic Estate Planning

• We also wanted to make sure we had some essential estate planning (Will, Living Trust, Power of Attorney, and Health Care Proxy) done. To read more about this, please see this post, www.stevenwitter.com/basic-estate-planning

These are just some of the things to think about when you are expecting. If you have any other tips for us, please share!

‍