The other day J and I were having our usual discussion of going out for dinner or staying in. I know I’ve said this a hundred times…once I’m home then I hate getting back out, but I hate cooking even more!
After some serious thought and way too much time, we decided to stay in. Really the thought process went like this…
J: What’s for dinner?
Me: I don’t know. What do you want?
Me: I don’t want to cook and clean, that’s for sure!
J: Well we could go out.
M: Yeah, but I want to do for cheap – like less than $20.
J. Well I don’t want fast food. So what do we have here?
There you go… I’m stuck on how much we spend and J doesn’t want crap food. So we stayed in and cooked. We cooked dinner together and then worked on the dishes together. It was a win-win-win. Win because we didn’t spend any money since we used what we had. Win because he had a healthy dinner. And win because I didn’t do it alone.
These small thought processes have overtaken us lately. As we’re preparing for the baby to arrive, we’ve been thinking more and more about money. We’ve been taking a few steps here and there to prepare.
As you probably can tell, the theme for February is Focus on Finances. So today, we’re focused on financially being prepared for our soon-to-be baby boy.
I want to share how we’re financially preparing for baby.
I mentioned a few weeks ago how we were making small budget changes since the beginning of the year. You can read that post here. But I wanted to dig deeper.
When we put together our master budget back in January, we talked about how our lives were going to change with a little one around. We knew that we would have late nights, long days and be overwhelmed at the beginning. We really have no idea what to expect. The one thing we did agree on is…
…we do not want to be thrown a financial curveball when we’re lacking sleep.
We started budgeting as if the baby was already here. That’s how we’re financially preparing for baby. We had two reasons for this:
- we didn’t want to be facing a financial hardship from our lack of planning.
- we wanted to make sure how our money would work with less of it being spent on whatever-we-want expenses.
Here’s what our budget looked like back in January – now I have changed some of the numbers because, well, that’s private.
You will see two items that don’t make sense for a couple that doesn’t have a baby yet. Groceries & Diapers and Day Care.
We estimated what the monthly increase would be to our grocery budget to cover diapers, wet wipes, and such. Then we found a daycare we liked and found out how much they charge per week.
We added in these future expenses so we could go ahead and be prepared.
Here’s what you need to do to add in your future expenses:
- Take an educated estimate of what the expense will be. Call around to get an idea of what the daycare will cost, the dog sitter, or ballet lessons.
- Figure it into your monthly or weekly budget at least 6 months before the expense will start. That way you can make any changes, find a less expensive option or see if it’s really worth keeping your cable.
- Physically transfer the money from your checking account into a separate savings account. We transfer ours into our emergency fund. We know that account is off limits except when there is a legitimate reason. By physically removing the money from your account, you won’t be tempted to spend it.
You may have to reevaluate your budget after 6 months to make sure you’re on the right track. We plan on not actually starting daycare for at least 2 months after his birth. This will help us and give us time on adjusting our grocery budget and figuring any other financial need out.
This technique can work for just about any big life change.
That’s what’s so great about it!
Getting ready to move? Take a look at what changes in income, if any, you’ll be facing. Have you looked at what the living expenses are going to be? There is so much to consider when planning a move…
rent increase (or mortgage)
gas for your (will you be driving further to get to work?)
and many, many more
Maybe you’ll be lucky and there won’t be any increases. Maybe the clouds will open up and you will actually have a decrease…
What about thinking of quitting your job to become self-employed. You need to really think about what your realistic income will be and try to start living off of it. There are some great articles out there on preparing to become self-employed. I really liked the one “How Much to Save Before Quitting My Job” by GoGirlFinance.