Prepping for Baby

The rabbit died! That's bad news for the rabbit but great news for you. You're about to become a mommy or a daddy. Congrats!

Course, the fact that you're bringing a new life into the world, one for which you will be totally responsible, comes with both enormous joy and a little trepidation. Once you get over the initial high, you'll have to deal with the mundane questions: Will you have enough to buy what you need for baby? How much income will you have on mat leave? Will you be able to stay home for the full year? How will you split your mat leave with your partner, if you have one.

This is a major life step, and it's one a lot of people fall into "accidentally." I kill myself with laughter when I hear that. Really? Cos you don't know where babies come from?

Step #1: Find out how much money you'll receive on maternity leave. If you're using every penny of your income(s) to make ends meet, you may be in for a bit of a shock when you have to do so on less money. How much less? Well that depends on whether you'll get a top-up at work or not. If you don't you may be in for a shock when you find out what your maternity leave benefits amount to.

Step #2: Make a budget for your mat leave. Hey, you can keep flying by the seat of your pants but I guarantee you'll end up in debt. With a little foresight and some planning you can come out of this will your financial life still in balance. If your income is going down, you'll have to prioritize where you'll spend your money.

If you've already been taking my advice and you know which of your expenses (fixed and variable) are nice-to-haves and which are must-haves, you'll know where to turn first to trim back on your expenses. Eating out, entertainment and big-boy and big-girl shopping will come to a grinding halt. With a new baby in the house, this is all about making sure you can make ends meet and incorporate those new little expenses (about to become big expenses) into your life. You'll be exchanging your disposable income for disposable diapers!

Step #3: Practice living on one income. Don't wait until baby's arrival to put your new budget into action. Start while you're preggers and not only will you be more practiced when the little bundle of joy arrives, but you'll have a whack of extra money to achieve a bunch of things like:

• paying off your consumer debt,

• building up your emergency fund, and

• socking away some money for baby stuff.

Step #4: Pay off your consumer debt. The last thing you want to have to deal with while living on a reduced income is interest costs and debt repayment. So work hard now (get thee a second job) and get your consumer debt GONE. Yah, you had your fun. Now you know why it was such a bad idea to put all that crap on credit. Whatever your reason for having consumer debt, get it gone. Negotiate your interest costs down, transfer balances to lower cost options, and get that sucker paid off.

Step #5: Build up your emergency fund. If you're living on one income and you've got another mouth to feed, you can't afford to be cavalier about your emergency fund. A loss of the primary job at this point would be devastating financially. So would any unforeseen negative shift in circumstances. You must have an emergency fund in place. Aim for six months worth of essential expenses… those must-haves we've talked about.

Step #6: Decide what you'll need for baby. Check with friends and family for what they found most useful. See who has stuff in storage you can bum for a while. Don't get suckered into dumb crap like specialty diaper disposal units or wipe warmers. (Seriously?) If you know someone will be throwing you a shower, register for the things you really want. Shop second hand. And be creative when it comes to doing up baby's room. Invest in pieces you'll have for a very long time, but don't waste money on pretty little nothings that baby will outgrow (furniture wise as well as clothing wise) in no time flat.

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