Having a baby is one of the most important milestones in life; it can also be one of the most expensive. If you decide to temporarily stop working, you’ll need to figure out how you’ll afford paying your regular expenses with only one income.
Refinance Your Student Loans
If there’s anything that can get between getting your finances in order before your baby arrives, it’s having outstanding student loans. Student loans are often considered to be one of the most intrusive forms of debt a person can have. With such a hefty amount of money to pay back combined with fluctuating interest rates, it can be difficult trying to save every month. However, an there is an option to save money and lower how much you have to pay and reduce interest rates. This can be done with by refinancing your student loans. Student loan refinancing is turning your old loan into a new, favorable loan. But you must first meet the eligibility requirements. Here’s a list of the requirements you typically need to fulfill to be considered eligible:
- Credit score of at least 650
- Successfully completed your degree program
- Debt-to-income ratio is under 50 percent
- Show proof of having a stable income
- Haven’t defaulted on your student loans
Keep in mind, not every lender has the same requirements, so be sure to consult your lender beforehand.
Start Creating Your Budget
Budgeting is one of the most important skills for a new mom to have. Children, especially babies, can be very expensive at times. Being disorganized with your finances can lead to a bunch of disastrous issues. The best way to have an idea of what you’ll be left with each month is to create a new budget. Aside from the monthly expenses, you’ll also have to factor baby supplies such as formula and furniture, like a crib and playpen. Take how much you, and your partner, earn for your monthly income and start subtracting your monthly expenses. Doing so gives you an idea and the opportunity to strategize where to go from there.
Build an Emergency Fund Quickly
Since you’re going to have a newborn in the family soon, now’s the perfect time to start building your emergency fund. An emergency fund is a separate form of finances that’s used specifically for emergencies. If you or your child gets ill and can’t afford it on your own, you need to use your emergency fund. Another example would be if your car broke down and you need to get it repaired quickly.
The ideal amount of money you want to have put away is at least four months of your monthly expenses. That way, you’ll be well-prepared should something go wrong. If you cannot achieve this with your existing salary, consider an online side business to speed up your savings now while you have the extra time. Once the baby comes you probably won’t be able to attend to a side hustle, so this is great to do during the prep stage.
Consider Getting a College Savings Account
Every parent wants what’s best for their child. One of the best ways to prepare for their future is to open a college savings account. These are a special type of account that parents use to assist their child when they’re older to finance their college education. If you’re looking one that comes with extra benefits, your best option is a 529 plan.