Can You Afford Parenthood?

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Hollywood’s clearly caught the baby bug. First it was Nicole Kidman and Keith Urban’s baby girl and then Angelina and Brad’s new set of twins. Now Rebecca Romijn and Jerry O’Connell have announced they, too, are expecting twin girls. While these multi-million dollar earners might not have any financial issues expanding their brood, the regular American on the path to parenthood could be in for some major sticker shock.

A new baby costs roughly $7,500 in the first year alone, according to a recent survey of 1,000 moms done by BabyCenter.com, a site for new and expecting parents. That doesn’t include childcare, which can easily run an extra $1,000 a month, says BabyCenter.com’s editor-in-chief, Linda Murray. For a more specific guesstimate, input details about your own parenting situation on the website. I discovered that if I had a baby tomorrow, I’d need about $39,000, including the cost of childcare, to take care of my newborn for the first 12 months. Yeesh.

Here are six ways to financially prepare for your bundle of joy.

Reduce your credit card debt. Try to start parenthood with a clean VISA slate, since you’re likely to incur a heap of additional costs preparing for and raising a child. Not to mention, if you need to take on any loans over the next few years, as a result of needing a bigger home or a bigger car, banks prefer borrowers with a small credit utilization ratio. That ratio is equal to your level of outstanding debt over your total available credit. Keep that ratio to less than 30% and pay all your bills on time to put a smile on your credit score. Know that these days, a score above 720 helps nab the best auto and mortgage interest rates.

Don’t Move. Perhaps the biggest misnomer of having a baby is that expecting parents need more room to provide for the child. False. Save your time, energy and money while pregnant. Murray says an infant can probably sleep in a bassinet in the parents’ room for the first six months, especially if mom is breastfeeding. If money’s tight, don’t worry about going whole-hog on a fancy nursery. Instead, start a savings nest egg for all the day-to-day food and diaper costs in the first year.

Begin a savings program
. Put aside however much you can afford every week or every month to help you at least make it through your maternity leave.

Know Your Terms. This is a biggie. Review your insurance policy to know whether your health care provider covers pre-natal to post-partum. Delivering a child, including a last-minute epidural during delivery can be expensive if your insurance company isn’t completely on-board. Additionally, at least six months before your scheduled delivery, sit down with your human resource manager to clarify how much you will be paid during your maternity leave (if at all). “Most companies allow for time off but don’t pay you for that time off,” says Murray. In some states new moms can qualify for short-term disability, but that’s also very limited pay.

Have a Huge Baby Shower. Now is your chance to collect some baby booty. Register at a few stores where your guests can easily find your must-haves. The cost of a car seat and a crib can really add up, so if friends and family want to help, don’t be shy!

Take Care of Yourself. Eating a healthy diet, taking vitamins, cutting caffeine and exercising throughout your pregnancy can reduce health risks. “We also tell women to have a preconception check up,” says Murray.

Catch more of Farnoosh’s advice on Real Simple. Real Life. on TLC, Friday nights at 8 p.m.

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