Plan ahead to avoid financial 'baby blues'

Like most new parents, my wife and I felt a full range of emotions while she was pregnant: joy, relief, and anticipation combined with nervousness, anxiety, and downright fear.

What we probably should have been sensing, in retrospect, was just how expensive parenting can be: According to the U.S. Department of Agriculture, it will cost an average, middle-income family more than $190,000 to raise a child until age 18.

If that figure made you pause, you're in good company. A survey of 1,000 new and expectant parents conducted by Redbook magazine and Visa Inc. found that while 76 percent of expectant parents said they felt financially prepared for parenthood, 41 percent of new parents, in hindsight, admitted that they were not. In fact, fewer than half of expectant parents had even created a new budget for baby-related expenses.

Here are a few budgeting tips that should help ease the stress of pending parenthood:

Plan for the big day. Start planning financially for having a baby as soon as you can - don't wait until you're on the way to the hospital to have the 'money talk' with your spouse. Remember, the actual birth itself can be expensive. One-fourth of the new parents surveyed spent more than $2,000 out-of-pocket for normal delivery costs they assumed would be covered by medical insurance. Call your insurance company and find out what they will and won't cover for your delivery.

Parental leave. Don't forget to save money to offset maternity or paternity leave - for many people, that's unpaid time off from work. Check with your employer's human resources department for information about family and medical leave laws, or go to the National Conference of State Legislatures' Web site (www.ncsl.org), which summarizes these laws and provides useful links.

What will it cost? Nearly half of new parents surveyed said they overspent on a car seat; another 36 percent overdid it on a stroller; and 25 percent spent too much on photos, a crib and clothing. Need help? Visa Inc. sponsors a free Web site, Practical Money Skills for Life (www.practicalmoneyskills.com) with a handy calculator called "Budgeting for Baby." This interactive tool helps you estimate one-time and monthly expenses. Then it compares actual average retail prices along side your estimates, helping you set a more realistic budget.

Budget planning tips. You'll need to revise your household budget to fit your new, expanded family. Factor these points into your budget:

• Determine which expenses will change. While your rent or mortgage will probably stay the same, utility bills might increase if one person plans to stay at home. Entertainment costs will likely decrease at first, but remember babysitter fees later on.
• A reduction in household income (if one parent quits work or goes part time) can significantly affect your budget. If both parents plan to keep working, be sure to factor childcare expenses into your budget.
• Check if your employer offers a dependent care reimbursement account that lets you set aside money, tax free, to pay for licensed day care.

The joys and rewards of parenthood are more than enough to offset the sleep deprivation. Just make it easier on yourself by planning ahead.