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Ask the Experts: April 2018

Talking about money is something that a lot of people don’t feel comfortable with. However, it’s important. When you don’t talk about money and when you don’t ask questions, the opportunity for misinformation exists. Everyone has questions about money and, by talking about them and asking them, you learn.

When you have more information, you’re better able to make plans for the future, manage your money today, and create stable financial plans.

That’s why our experts regularly answer money questions. We want to help improve the spread of accurate and helpful information. If you have a question for our team, ask us online on Facebook, Twitter or through our website.

The questions listed here have been condensed or rewritten for clarity and simplicity.

I’m about to have a baby in a few months. What do I need to do to prepare myself financially?

First of all, congratulations! This is an exciting time in your life. Of course, as you’re probably already aware, it’s also a stressful one. There’s so much to do before the baby arrives. And there’s also a lot to buy! If you’ve spent any time looking in baby stores recently, you’ll see that there are many, many expensive items available for sale. Of course, just because they’re available, it doesn’t mean that you’ll need to buy them.

One of the first steps to making sure you’re financially prepared for a baby is to come up with a list of things that you’ll need to purchase and then create a budget that makes these purchases possible. A good tip is to sit down with friends and family who have had a new baby recently and ask them what worked for them. There are a lot of baby items that aren’t necessary, but there are some that can really make raising your child easier. Figure out which items are which and make a list.

Before you start shopping, think about what others may be able to lend you. If you know someone who has a child, ask them if they’re willing to lend you some baby items for a short time. Anything you’re able to borrow will reduce your overall costs. It’s also important to keep in mind that, if this is your first baby, you’ll likely get a lot of gifts.

Another important part of financially planning for a baby deals with how you will afford your expenses on a reduced income. If you (or your partner) are going to take any time off work after the baby is born (and most people do) you’ll need to create a budget that will help you afford all of your expenses on a reduced income. Make a list of all your expenses (be sure to include what you expect to spend on the baby!) and then make sure you can afford everything on your expected post-baby income. If you can’t fit everything in, you’ll need to figure out where you can cut costs.

My car broke down and I need a new one. Should I buy or lease?

This will depend on several factors that are unique to your situation. If you plan to change cars frequently, leasing often makes more sense. Choosing to lease means that you will make payments for three or four years (depending on the term of the lease agreement) and then you’ll return the car at the end of the lease, or buy out the remaining cost of the car. When you lease a car, you often pay lower monthly payments because you’re not making payments on the entire cost of the vehicle.

However, you’ll need to make sure that you return the car at the end of your lease in good condition and that you follow all other aspects of your lease agreement. Otherwise, you could end up having to pay additional costs. These additional costs can be very significant, so you’ll need to read your lease agreement carefully.

If you choose to buy a car and finance the purchase, you’ll probably have higher monthly payments, but you’ll own the car at the end of the financing term. This can be a good financial decision if you’re planning on keeping the vehicle for 8-10 years or more.

Ultimately, the choice comes down to what you’re planning on doing in the future. If you can afford to lease another car in three or four years and continue to make payments, you might want to lease. However, if you’d rather make higher payments now in order to pay off your car and keep it for longer, than buying will make more sense.