For parents who are expecting a baby, there are plenty of financial factors to worry about. While welcoming a child is a joyous life event, no one enjoys the stress of managing costs related to their health, their baby’s health, and all the other expenses that a newborn brings.
That’s why it’s important to anticipate the costs of carrying and giving birth to a baby, to make sure the required funds are there when needed. With the rising costs of maternity care in the US, personal loans can be a good option for families trying to budget before, during and after childbirth.
Fiona matches consumers with personalized loan offers that can meet their specific needs.
Creating a Baby Budget
While several different costs go into having a child, hospital and doctor bills tend to make up the bulk of a baby budget. The National Institute of Health recommends that the average pregnant woman visit her doctor more than 10 times before giving birth. Depending on the insurance plan, those visits can rack up high out-of-pocket costs.
Additionally, average new mothers in the US (with health insurance) pay more than $4,000 for labor and delivery. Taking out a personal loan to cover a bulk upfront expense like a hospital stay, which is typically booked way in advance, can allow expecting parents to better manage the smaller expenses, like food and clothes, within their existing monthly budgets.
However, medical costs are not the only expensive part of having a baby. Additionally, the prenatal period is a time most families set up their nurseries. Buying a crib (which can cost up to $3,000) and other new furniture, as well as potential remodeling costs, is a budget in itself. On top of that, strollers and car seats are other expensive products that may throw a family’s monthly budget out of sorts.
As a result, it may make sense for some expecting parents to use a personal loan for expensive non-medical costs, especially if their health insurance plan can cover a majority of the hospital and doctor bills.
Accounting for a Repayment Plan
For expecting parents seeking a personal loan it’s important to consider the full picture, which includes repaying the loan. The first goal when applying is finding the best interest rate, typically presented as a fixed APR (annual percentage rate). The lower the APR (which depends on the applicant’s credit score), the less a borrower will ultimately pay in interest.
In addition to interest, the loan term (or length) is another important factor, as it determines the monthly payment amount and how long a borrower has to repay the lender. Since most expecting parents will be dealing with transformed monthly budgets (due to baby costs not covered by the loan and potential changes to income), it’s crucial to pick a loan term option that fits your financial situation. Some borrowers may opt to ultimately pay more in APR if it results in a lower, more manageable monthly payment.
Try Fiona to get matched with personal loans to help fund your baby budget.
Before choosing a personal loan to cover childbirth costs, it’s imperative to assess all the expenses involved in having a baby. This way, parents can know what high cost item(s) they want the loan to cover, while factoring other baby purchases and their repayment plan into a monthly budget. Once that is established, applicants should look for a personal loan that best meets their modified financial needs.
Fiona helps by presenting offers with various interest rates and loan terms, to make applicants better informed in their decision making.