8 money moves for when you expect one baby ... but find out you’re having two (or three)
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Planning for the financial impact of a single baby is challenging. But if you just learned you’re having twins, triplets or more, you may be wondering how you’re going to afford those extra bundles of joy. Here are eight money moves to make when you’re expecting one baby … but learn you’re having multiples.
Having a family budget with one baby is a good idea, but it becomes essential when you’re expecting multiples. If you were planning to “wing it” when the baby arrives, you may no longer have that luxury. Diapers, wipes, clothes, formula and other expenses add up quickly, and you’ll need extra supplies for multiples.
Take a look at your existing income and expenses. Estimate the monthly baby costs to come up with a working budget. You may have to reduce spending in other areas. You also may need to adjust your budget to match reality when the babies arrive, but it will be better to work with an existing template than to start from scratch. This simple spreadsheet can help.
Ultrasounds can detect multiples fairly early, with most parents learning of twins between ten to fourteen weeks into the pregnancy. That leaves plenty of time to start amassing a savings fund. Not only will you want to save for baby expenses, it’s a good idea to have an emergency savings fund that covers six months worth of spending. Fortunately, there are a few simple ways to save more in five minutes or less.
When you’re buying new baby products, prioritize necessities like diapers, wipes and clothes over toys and gadgets. For other stuff, pick up secondhand or sale items. Hit up parents of older kids for their old baby stuff. Look for quality furniture in consignment shops and hunt for sales locally or online. Secondhand goods and sale items will help you save cash on supplies.
When you have incoming multiples, you should evaluate your health insurance (here's how). Not only will you want a good health plan to cover the birth and hospital stay, you’ll need coverage for the years to come. Since the birth of a baby (note: not the pregnancy itself) is a qualifying event, you can change your health coverage outside of open enrollment.
"Take a look at your health insurance plan now," said Tyler Omoth, personal finance expert at The Penny Hoarder and recent father of twins. "With twins on the way, there is a good chance you’ll spend some time in the Neonatal Intensive Care Unit.”
Plus, “those expenses add up fast and once you bring the kids home, you’ll be seeing your pediatrician a lot," he says.
Make sure you know the major out-of-pocket expenses associated with your plan. These include:
Your deductible: how much you pay out of pocket before insurance kicks in
Your copays: how much of each visit/prescription you're expected to pay for
Your premiums: the monthly bill associated with just having insurance
"By understanding your insurance now, you may have time to switch it, if needed, or at least set yourself up to make informed decisions once the babies arrive," Omoth says.
Wholesale clubs like Costco, BJ’s and Sam’s Club can be a lifesaver for large families. Not only do they offer savings on bulk items like diapers and formula, they often have low-cost pharmacies and deeper discounts on store-brand versions of common baby products.
Parents take out life insurance policies so their spouse and dependent(s) can meet current and future financial obligations in the event of their untimely death. If you don't have life insurance, now is the time to get coverage. If you do have life insurance, make sure your policy adequately addresses your multiplying needs. Policygenius' life insurance quoter can crunch those numbers for you (and your partner) to provide a tailored recommendation.
If both parents plan to work, figuring out day care is essential. Whether you plan to enlist the aid of grandparents, share a nanny with another family or use a day care center, start making arrangements now. Day cares in high-demand areas often have long waiting lists, so you may need to get on a few lists to increase your odds of getting into one.
"Brace yourself for day care if you plan on continuing to work. It’s expensive for one child, and while you may get a slight discount for twins, it’s still brutal,” said Omoth. “Look into a Dependent Care Flex Spending Account plan through your workplace."
With a Dependent Care Flexible Spending Accounts (DCFSA), you can contribute money from your paycheck pre-tax and use those funds for eligible day care, babysitting, after-school care, summer camp and other dependent-care expenses.
“Not only will you save on your taxes, you’ll also have that money set aside automatically,” Omoth says. “It won’t fully cover day care, but it helps."
The IRS caps the amount of money you can contribute to a DCFSA at $5,000 for single and married couples filing jointly and $2,500 for married couples filing separately each year. Like a traditional Flexible Spending Account, you can't carry money over year-to-year so calculate your contributions carefully.
The cost of a higher education is pricey now; consider what it will be when your brood is applying.
"Start thinking about college now,” Omoth said. “You can start a 529 plan to save for your kids’ education, but there are other options out there as well.”
For more on these alternatives, check out our state-by-state guide to 529 and prepaid tuition plans.
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