Saving for a Baby

Whether you just got the great news that you’re expecting or you’re still thinking about starting a family, anticipating a new baby is an exciting, sometimes overwhelming time. Most likely, the financial impact of having a child is one of the things you’ll be focused on when you decide to start a family. From diapers to daycare, there are several new expenses that come with your bundle of joy. The key to setting yourself up for financial comfort once the baby comes is to start saving as soon as you can. Below are some expenses to prepare for and tips on establishing a savings account for a baby.

Why start saving for a baby?

If you already have an emergency fund or savings account set up, you might feel as though you have your bases covered. But being prepared in case of emergency is even more crucial as a parent, and establishing a new account specifically for the baby keeps your emergency fund separate. Your baby’s savings account should be used to cover all those baby-related expenses, both large and small, that weren’t on your financial radar previously.

When it comes time to choose a savings account for your baby expenses, it’s always a good idea to compare savings account rates at different institutions so you can get the most out of your money. Some accounts have higher savings account rates the longer you leave the money untouched, so you may want to consider a six-or nine-month certificate of deposit or money market to earn more in a shorter period of time. Bear in mind, establishing this account doesn’t mean you should stop contributing to your regular savings account, emergency or retirement funds.

What will your baby’s savings account cover?

While every situation is different, these are some of the most common major expenses new and expectant parents should anticipate the need to cover.

Hospital bill: Whether you have insurance coverage or not, your hospital bill will likely be a major expense. Without insurance, you could find yourself with a bill that’s upwards of $10,000, while those with insurance can expect a bill around a few thousand, depending on their specific insurance policy. Be sure to pay all your medical bills on time to avoid accruing any interest or late payment penalty fees.

Childcare: If you’re planning to go back to work after your baby is born, you will need to arrange for childcare. The cost for this varies greatly depending on which type you choose and what city you live in. Employing a full-time nanny will cost the most, with the national average weighing in at $350-700 a week, with a live-in nanny costing more. Whichever you choose, the rate will differ based on the nanny’s level of experience. A daycare facility will be a little less costly, with the national average at $972 a month. Clearly, childcare is not only a large expense, but an ongoing one that may require another dedicated checking or savings account to pull funds from.

Baby food and gear: Hopefully you’ll receive plenty of useful gifts from friends, family and well-wishers when the baby comes, but there will most likely be items that you need more of or didn’t get that you’ll have to buy yourself. Use the money you’ve set aside in your baby’s savings account to cover diapers, formula, food, wipes and other miscellaneous must-haves. By using funds from this savings account rather than the everyday checking account you use for other household necessities, you’ll be able to better track how much you’re spending on baby-related items and therefore gauge how much you’ll need to budget for going forward.

Saving for a family

While it’s difficult to be completely prepared for such a major life event, establishing a savings account as you start a family will provide peace of mind and help minimize some of the financial impact that will come when the baby is born. Speak to a banking professional for assistance finding competitive savings account rates on an account that’s the right fit as you start saving for a family.

Sponsored content was created and provided by RBS Citizens Financial Group.