This is a collaborative post.
Your first child signifies a lot of things. It’s a turning point in a couple’s (or a single parent’s) lives; it’s a wellspring of unexpected and limitless delight, and it’s a gateway to a whole new world of targeted marketing for diapers, breastfeeding supplies, baby clothes, and toys.
Your first child also changes the way you view the future. You’re no longer living for yourself, or for you and your partner. A newborn brings with it its own set of commitments and responsibilities, and this is especially true when it comes to money. Some new parents will be unable to do anything other than keep their heads above water due to a lack of financial resources. However, any new parent with the potential to save—or who has already saved some money—is suddenly confronted with a plethora of alternatives, possibilities, and worries.
You may be concerned about improving your children’s financial future, even if you’re fortunate enough to have a large savings account or a well-paying job.
1# Making and sticking to a financial plan
When you find out you’re expecting, your primary attention will likely be on preparing your home for a new baby, but you’ll also need to make time to organise your finances. Drawing up a budget and making a list of all your present incomings and outgoings is a smart place to start. All recurring, fixed costs, such as your mortgage or rent, insurance, council tax, utility/phone bills, and so on, should be included on the list. Remember to factor in items that only occur once or twice a year, such as your TV licence, car MOT and servicing, and vacations.
With these numbers in hand, consider if you could cut back on something and then put the extra money into a savings account. Whether you’re just getting started or want to boost your savings, it’s a good idea to set aside money for an emergency fund to handle any unforeseen circumstances, such as illness or even redundancy. According to financial experts, you should have enough money to cover your home expenses for six months.
2# Prepare for a drop in income
If both you and your partner work, maternity or paternity leave usually entails a lower income while one of you is away from work. Find out what your company offers and what state assistance you may qualify for so that you can estimate how much you’ll need to live on while you’re not working and plan accordingly.
If you’re tech-savvy and willing to invest in up-and-coming money-storing software such as crypto accounts, it is likely that you will need to do research beforehand, but it’s good to know the option is there for you should you need to use it.
3# Create a household budget
Extra expenses occur with a new child. According to the USDA, raising a child costs an additional $10,000 to $34,000 each year for American families. Baby clothes, diapers, more food, and other childcare costs, on top of all the pregnancy and postoperative medical costs, may quickly pile up.
Some costs, such as diapers and new toys, are ongoing, whilst others, such as a stroller or car seat, are one-time purchases. Understanding which outgoings may be a one-time financial hit and which regular costs will have a long-term impact on your budget will be beneficial. Mint or Personal Capital, for example, are online budgeting programs that can make this process as painless as possible.
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