Friday, January 8, 2010

Thinking Ahead: The Baby Fund

Since Daniel and I live solely on his income (being a full-time homemaker does not draw a monetary paycheck :) ), it is of utmost importance that we don't let things creep up and surprise us. Yes, there are emergencies, and that is what an emergency fund is for, but when big (or even small) things are known about ahead of time it's always good to have a plan in place for how you're going to pay for it if it's going to cost money.

Last spring when Daniel and I talked and prayed and talked and prayed about it and finally came to the conclusion that we were "as ready as we'd ever be" to start a family (Don't worry! We both want to have kids very much!), we knew we needed to start saving immediately for our little person. We didn't know how long it would be until I would get pregnant, it could be right away, it could be months or years. Regardless, we knew babies cost money, even when you have decent health insurance (which I have not had any reason to not be pleased with mine).

Babies cost a LOT of money. Even before they are born there are copays, deductibles, maternity clothes, etc. etc. Not to mention a crib and other "nice to have" things - unless you plan to use a cardboard box or dresser drawer :PWe tossed around some numbers, not really knowing what we were talking about, and came up with a ball-park figure to start setting aside each week into our baby fund. We started adding to our baby fund and it started growing. Shortly thereafter our little baby started growing, too :)

So far, between our baby fund and our medical fund, we have had to take very little money out of savings (different from our emergency fund) to pay for baby/pregnancy related expenses. It hasn't been cheap. There have been some surprises along the way that we hadn't counted on (um... meeting the insurance deductible was one of those things, but we managed). I didn't know maternity clothes were so stinkin' expensive, but they are probably just as "expensive" as other brand new clothing, which I rarely buy! (And it has been VERY nice that several ladies in our Sunday School class loaned me their maternity clothes stash to use! I've had to buy very little, really.)

Quite a few people have been surprised that we had and have a baby fund. When I met with the insurance lady at the Dr's office to discuss payments to meet our deductible, she was pleasantly surprised that payments, period, were not going to be a problem for us. I must not look like I have gold bars stashed away in my closet... hmm. I assured her that we had been setting money aside for baby-related things and no, $X was not going to be a problem. I plan to use the baby budget to fund cloth diapers for the baby and any other needs we have along the way.

Once the baby is born and all those expenses are out of the way, I hope to continue our baby fund for two things: to get a head start for (hopefully) the next little munchkin, but also to get started on saving for things I know will likely cost an arm and a leg down the road (schooling comes to mind), and possibly even a savings account.

For anything - from a weekend camping trip to a new house - it is always easier to start saving for it sooner rather then later. Especially if you have a time frame that you're working in, the sooner you start saving, the smaller your "payments" to the fund can be, which is a lot easier than at the last minute realizing "Oops! Every single extra penny and then some!" has to go towards being able to have the end result debt-free.

This post is linked to Life As Mom's "Frugal Friday" where SEVERAL people link up, blogging and sharing their Frugal Friday posts. Head on over and check it out, you might learn something - I always do :)


Chelsea said... [Reply to comment]

Having a baby fund helped us a lot when we had our child this year. We were able to almost fully fund all of her hospital expenses and only had to use about $1,000 from our emergency fund for an unexpected extra day in NICU. This year I'm excited to put a little more in our emergency fund as we won't need to save for a baby. I think you're very wise to pay for the expected expenses.

Tracey said... [Reply to comment]

Great advice! One of the things we put money towards each month is a car. The vehicles we have now are fine, but we know the day will come when one of them has to be replaced, so we are planning ahead in order to avoid a car payment.

Best wishes on the upcoming birth of your child!

Unknown said... [Reply to comment]

We had a "baby fund," too (we just set aside a large chunk of our tax return to take care of baby stuff) and it helped out SO much. Baby showers helped with some of the material necessities, but people were much more interested in buying us cute baby outfits than practical items like cloth diapers, so our fund definitely came in handy! Good for you and Daniel for thinking ahead. That's so funny (and sad) that that woman was surprised you had money saved up for expenses!

Anonymous said... [Reply to comment]

we don't have a human baby fund but we have our "babies" (Linden's lungs & my hernias & nose!) fund. We both contribute to it - Linden through having to work harder at finding other help so I can go to work for our health insurance, which is our "fund".

Miss G said... [Reply to comment]

We're expecting our first as well! I don't know where you live but you might see if you have a Kid 2 Kid consignment store in your area. I have found great prices on maternity clothes there, things in the $6 or $7 range and also Ross dress for less has maternity clothes. I got jeans for $4.49 and $6.49. Kelly

Whitney said... [Reply to comment]

We received a piggy bank at my baby shower. We put all of our change into my son's piggy bank and some weeks we'll throw a $5 or $20 in there. He just turned a year old in December and we will soon open a savings account for him with his piggy bank.

Congratulations on your pregnancy!

Rachel said... [Reply to comment]

Just wanted to pop in and note that having a baby can be very expensive, but only if you let it. We just had our daughter last June, and there are so many ways to save money on baby related expenses. We got all of her stuff used- either from garage sales or hand-me-downs from others who have older children. The only thing new we bought was a crib, and it was under $100. We also went with a midwife for the birth, which alone saved us thousands and thousands of dollars (our insurance did not cover maternity expenses, and we paid in cash, so we were so happy the midwife was so affordable). Our daughter has been breastfed since birth, so no formula costs, and we use cloth diapers. having a baby can be as expensive or as cheap as you want it to be, just takes planning.

Miriam said... [Reply to comment]

@RachelThank you for stopping by and commenting! You are so right about it being as expensive or inexpensive as you make it/want it to be. I had forgotten about this post, now that it's been over a year since we had our daughter, I should do an update post :)