Financially Preparing for a Baby

Get Ready, Get Set, Save

The rewards of parenthood are priceless! Follow these tips to make the price tag more manageable, as well.

1. Maximize your health insurance benefits. Sometimes an HMO or PPO (preferred provider option) plan will cover more of your total costs than a traditional 80-20 health plan. If you are able to get comparable care under one of these plans -- i.e., if you are comfortable with the physicians and hospitals they cover -- it may be a good idea to switch over.

2. Sign up for disability. If your employer doesn't offer disability insurance, you can get it independently. Before choosing a plan, read the fine print to be sure that pregnancy and its potential complications are covered.

3. Consider term life insurance. A financial planner can help you figure out how much life insurance you'll need; make sure both spouses are covered. If money is an issue, choose 20- or 30-year term life insurance -- it will cover the time period when you need it most, for substantially less than universal or variable coverage.

4. Take it easy on the baby buys. Those tiny little outfits, strollers, and top-of-the-line baby furniture can easily run into the thousands of dollars. While you should never economize on safety items (like car seats and intercoms), there's no reason to spend big bucks on an outfit your child will outgrow in two weeks. Best reality check: Take a friend who's an experienced mom -- preferably with two or more children -- on your buying spree. When she's done laughing herself half to death, she'll tell you to skip the embroidered diaper-holder and save the money for college.

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