When you and your partner find out you’re about to be new parents, the natural elation is quickly tempered with the realization of how much you need to do before the baby arrives.

One of the most important things you need to do is be prepared financially. While children are wonderful, they’re also expensive, and you’ll need to be ready to handle the cost. If you take some essential steps beforehand, you can make sure you’ll be financially prepared to welcome the new baby into your family.

Update Your Household Budget

A new baby means brand new expenses, and that means revising your household budget. Raising a child costs anywhere from $10,000 to $34,000 a year, and that doesn’t count the pre-and post-natal medical expenses. If you don’t want these new expenses to overwhelm you, you’ll need to update your budget.

You can start updating your budget by listing out all the expenses that come with a newborn baby. Then separate those items out into recurring expenses and one-time purchases.

Recurring expenses are purchases like baby food, diapers and new toys. You’ll want to add these as expense categories on your monthly budget. One-time expenses, on the other hand, are items like cribs, car seats and playpens. They cost more up front, but you only have to buy them once so you can ignore them for now.

Come up with an estimate of how much money you’ll need each month for these new budget categories, then take away money from your other budget categories until you have balanced your budget. While this might be stressful, especially if money is tight, there are usually ways to find extra money in your budget. You can also take this opportunity to look through your entire budget and make sure that it reflects your current needs, wants and goals.

If you don’t have a budget, now is the perfect time to start.

Set Up A New Baby Fund

Remember those one-time expenses? Here’s where you come up with a plan to start paying for them. Set up a new baby fund, preferably as a savings account and put money into it each month until the baby arrives.

Ideally, you’ll want to have enough money in your new baby fund to pay off all your one-time expenses, including:

• Car seat
• High chair
• Baby carrier
• Changing table
• Crib
• Stroller
• Baby Monitor
• Bedding
• Baby silverware and plates
• Baby clothes

You should also add your initial expenses for toys, diapers and baby food to the list.

If you’re starting to freak out about the expenses involved, remember you can save money on almost all these items by buying them secondhand. The one exception is the car seat, which you’ll want to buy new to make absolutely sure it’s safe.

Pay Off Your Debts

If you have debts, particularly credit card debt, make a point of paying them off before the baby arrives. Once the baby is here, you’ll have a lot less extra money to throw at this expense. Additionally, the interest on your credit card debt will be a drain on your budget at a time when every dollar counts.

Build Out Your Emergency Fund

Emergencies are an unfortunate fact of life. Eventually, you’ll need some extra money in an emergency fund in case you’re in an auto accident, have to go to the hospital or get laid off.

While many experts suggest you should have anywhere from 3-6 months of salary saved up, you’ll want to save a bit more if you have a family. Shoot for having one year’s worth of salary stored up, but once you have around six months of salary saved up start looking for financial vehicles that can give you a better interest rate than a traditional savings account.

Start A College Fund

Barring a major shift in the future, you and your child will both have to figure out how to pay for college. The earlier you start saving, the more money your child will have available when they go off to college.

You can select any one of several options, including a 529 college savings plan and a Coverdell educational savings account. No matter what option you select, you’ll want to make a point of putting aside a little each month. Even if you can’t put aside a lot, every little bit will end up helping.

Make A Parental Leave Plan

Babies take a lot of time and effort, especially in the first few months, and while many employers do offer paid or partly paid parental leave, they are under no legal obligation to do so.

You’ll want to go over your employer’s parental leave plan thoroughly to figure out what time you get off to have the baby and care for it/recover afterwards. Keep in mind that if your employer doesn’t offer parental leave, you might still be able to take an unpaid leave of absence under the Family and Medical Leave Act, provided you have worked at least 1250 hours for your employer, worked in your current position at least 12 months and your employer has at least 50 employees.

Once you know what your employer does and does not offer, you can start to plan how to care for the new baby with your partner.

Prepare for Parenthood With First Alliance Credit Union

Having a new baby is literally a life-changing experience, and while it is wonderful, it can also be stressful in a lot of ways. However, if you budget and prepare for the expenses beforehand, you’ll have an easier time dealing with your new role as a proud parent.

You can also prepare yourself financially to be a parent when you become a member of First Alliance Credit Union today. In addition to our traditional savings accounts, you can also put money in a money market account with a higher interest rate or invest the money in a certificate of deposit (CD) until you’re ready to use it to start a family. You can also apply for a personal line of credit to help pay for all those one-time expenses.