If you’re getting ready to welcome your first baby, you probably recognize that your financial situation is going to change. With diapers, wipes, baby furniture, doctor visits and so much more, you’ll have to account for some new expenses. And if one parent will be staying home with the baby, even if it’s just a temporary maternity or paternity leave, you may be facing a reduction in income at the same time.
It’s enough to stress anyone out. But there are some simple ways to plan ahead to make the transition as smooth as possible.
Here are four steps to help get you ready.
1. Track your current expenses
The first step in preparing for the future is knowing exactly what the present looks like. Having a handle on how much money is currently coming in and what it’s being spent on each month will provide the baseline you need to make educated decisions going forward.
You can go over your expenses yourself by looking at receipts and bank statements, or you can use tools like GoodBudget.com and You Need a Budget.They make budgeting easier by automating most of the process, pulling in transactions from bank accounts and credit cards and helping you categorize them.
2. Estimate your new expenses
Having a baby will add some expenses to your monthly budget, but you can get a handle on them ahead of time.
Babycenter has two great tools for estimating the overall costs of raising a childand the specific first-year costs. Use them to get a ballpark figure for baby’s first year, then divide that number by 12 for a monthly amount you can plug into your budget.
3. Build a cash cushion
Take that estimated baby budget and start setting the monthly amount aside insavings account now — before the baby gets here. This will do two big things for you:
- It will help you adjust to your new budget before you have the additional stress of caring for a newborn.
- It will help you build up a cash cushion to handle unexpected expenses that come up after the baby is born, so you won’t have to resort to credit cards.
4. Keep the lines of communication open
Having a baby is a huge change, and no matter how well you plan, there will be plenty of ups, downs and surprises.
Setting a regular time to talk money with your spouse or partner can do more than anything else to keep you on track. Open, honest conversations allow you to stay focused on your biggest personal goals, adjust to changing circumstances, and solve problems before they get too big.
Just like learning to walk, adjusting to the new financial realities of having a child is a matter of taking things one small step at a time. If you track your spending, build your savings, and have regular check-ins with your partner, you’ll have all the tools you need to get up and running.
This article originally appeared on NerdWallet