Amy L. Cooper-Arnold has been a reporter for
CardRatings.com
since 2004. Her articles have been republished by respected publications
throughout the country, including Young Money Magazine, E/The
Environmental Magazine and About.com. Amy recently graduated with honors
from Austin Peay Univ. and is currently taking graduate-level classes.
|
A new baby—such a joyous occasio
A new baby—such a joyous occasion, and expectant
parents often enjoy the process of planning for their arrival. Decorating the
nursery, filling the closet with tiny outfits, stocking up on diapers, and test
driving strollers are just a few of the things needed to be done before the
great event.
But all these fun “to do” items can become very
expensive, and without a little planning new parents may find themselves buried
in credit card debt. In fact, according to a September 2005 survey sponsored by
REDBOOK magazine and Visa USA, while 76 percent of expecting parents feel they
are financially prepared, in looking back 41 percent of new parents say they
really were not.
So, what are expecting parents to do?
Create a Realistic Budget
As a result of the survey, Visa USA Corporate
Relations spokesperson Jason Alderman says they found the big missing piece of
the financial puzzle for expecting and new parents is a realistic budget.
"A budget can help guide,” says Alderman. “Do we need to cut back in other areas?
Do we need to rethink some of the expenses we’re planning for the baby? Do we
need to bring in more money? Does somebody need to take another job or do
something different in terms of the revenue that’s coming in? But you can’t make
those decisions without having a budget.”
Having a budget doesn’t ensure success, however,
unless it’s grounded in reality. Alderman suggests two ways to stay grounded.
One, realize that many cheaper models provide all
the safety and utility as the more luxurious, expensive models (nearly 50
percent of new parents say they overspent on a car seat, according to the
survey).
Two, do the research to find out how much baby
items really cost. Some items such as diapers, wipes, and clothing don’t cost as
much as you might think—actually, some of these items are cheaper than 10 years
ago. Visa created a
Budgeting for Baby Calculator to help you through the
process.
Pay Off Current Credit Cards
Newborns bring a whole new set of tensions into a
family, and financial issues including credit card debt only compound the
issues. It will be more difficult to find the extra money in your budget to pay
down the debt because of added baby expenses. It’s easier to start your new
family life off with a clean slate by paying off all credit cards before baby’s
arrival.
Take Control of Credit Cards
If you plan to keep using credit cards after
baby’s arrival, take firm control and pay them off every month. You may want to
consider credit cards that offer cash rebates or deposit rebates into a college
savings plan. However, beware—if you cannot pay the balance in full each month,
interest payments will typically far outweigh any reward you earn. Browse our
Card Reports section for ratings on a wide variety of available credit card
rebate programs.
Plan for the Unexpected
When it comes to having a baby, the REDBOOK/Visa
survey points out expecting parents are not saving enough for out of pocket
delivery costs. According to the survey, 25 percent of new parents spend over
$2000 for hospital charges in a normal, healthy delivery. However, expecting
parents are saving an average of only $776. The good news about preparing for a
larger bill is if you need it, you have it; and if you don’t, you still have it
for a deposit into a savings account.
Keep the arrival of your little one joyous by
determining today to take charge of your finances and credit cards. It can be
done, and it’s a great start in the right direction to someday teach your child
about healthy financial practices!
--End--
| 
