Financial Considerations

Dorothy Adams* was shocked when a friend revealed that her baby girl's birth had cost her more than $25000. Furthermore, this was a normal pregnancy and birth with no complications. Since Dorothy was dreaming about having her own children, she decided to seek an economist's advice about appropriate financial preparation for having a child. 

Make sure you're covered. Even if you have health insurance, there can be huge out-of-pocket expenses. In large part, this depends on what transpires during delivery and the type of insurance you have. Go over your policy with a fine-tooth comb to see what your out-of-pocket expenses will be for hospital stays and for major surgery in the event that you require a cesarean delivery. If your place of employment gives you a choice of insurance options, you might want to consider taking a more expensive policy that gives you added coverage during your pregnancy and delivery.

Preexisting Condition

If you don't have health insurance, get coverage now, before you get pregnant. Pregnancy is considered to be a preexisting medical condition and many insurance companies will refuse to give you coverage. Pregnant women can however apply for Medicaid as long as they do so before the delivery. Having some form of insurance is better than having none. A delivery can cost you from $10000-$30000. It's also important to have medical coverage in place for the baby, since a newborn is very vulnerable and may need medical treatment.

See if you can set up a flexible spending account. The benefit of this type of account is that it lets you use your pre-tax salary to pay for your medical expenses or for the care of your dependants. However, you need to take care to spend the money you put into the account within a certain time period called the "Benefit Period." If you neglect to spend the money during this period, you lose the money. A Benefit Period starts on January 1st and ends on March 15th of the next year.

Great Deal

You can access the money as soon as the Benefit Period begins which means you can draw the entire sum you intend to contribute over the course of the year right away.  You can withdraw the entire amount on January 1st even though no paycheck deductions have yet occurred. This is a great deal for pregnant moms-to-be who want to take a break from work after the baby is born. There is no need to return the money your employer has set aside for your hospital expenses. This money is not even taxed as income!

Repay all your major debts before the baby arrives. Your family expenses are going to go sky-high when you have the baby. You do not want to be saddled with huge debts when you're trying to take care of yourself and your baby. You may not be able to pay off all your debts, but you can try to make a dent in repaying loans before the baby arrives.

*Names have been changed.