Underestimating how much does it cost to have a first baby in the house can cause financial instability and emotional distress for young parents. First-time parents should have a budget in place to avoid stress and save money.
In today’s digital era, there are a number of personal finance blogs available online that can help you with budgeting so that you can start a family without going broke.
Read the article below to learn how to budget strategically when you are a new parent:
Cut Down on Unnecessary Expenses
First things first, if you are expecting or new parents, you are required to get control over unnecessary expenses. Every dollar that you earn must be spent wisely. You don’t need to spend all of your month’s salary on any brand chain that sells cute kid’s clothes.
You must know that having a baby can bring new financial pressures and postpartum. Hence, you must think ahead of time and start saving some money for the future of your family.
You can trim unnecessary spending to make the most out of your budget by;
- Making meals at home.
- Putting any bonuses/allowances into a savings account.
- Making a grocery list and sticking to it when going to the store.
- Avoiding impulse buying.
- Cutting down on entertainment bills and club memberships.
- Using a budgeting app to track down your daily, weekly, monthly, and annual expenses and incomes. This will help you achieve your financial goals when starting a new family.
Gear Up for Less
Gearing up for less is a sensible approach to make the most out of your buy and save some money in your pocket. If you are wondering how to achieve that? Then, don’t you worry, I’ve covered you here;
- Invest in nursery furniture that can do double duty. For instance, you can buy a kid’s regular chair that can also be converted into a booster seat. Or a toddler bed that can be converted into a crib as well.
- Don’t buy cute kids items that are useless in reality like crib pillows.
- Think big when it comes to buying baby diapers. Search for an online wholesale store that can help you save around $150-$200 a year.
- It is advised to have a baby-care bag in your car so you wouldn’t have to rush to an expensive store in case of any emergency. Your baby-care bag should include an extra outfit, 2 to 3 diapers, a tube of ointment, some snacks, and wipes.
Keep Track of Fixed Expenditures
Fixed expenses are the regular & major spending while variable expenses are irregular. It is wise on your end to keep a good track of your fixed household expenditures. This way, you wouldn’t end up breaking your budget at the end of every month.
When it comes to planning fixed expenses in your family budget, the below-mentioned shall be incorporated:
- Utility bills-gas, electricity, water, telephone, home security, cable, internet, etc.
- House rent or mortgage repayments.
- Family-health care insurance, auto insurance, home insurance plan.
- Personal loan repayments.
- Commute expenses.
- Credit card bills and payments.
Keeping good control over your fixed expenditures is one of the major steps towards managing money after having a new addition to your family. You should know that deliberately overestimating your fixed expenditures can result in extra spending money.
Build an Emergency Fund
Getting rid of unwanted debt is an absolute thing as soon as you start family planning. You shall work to eliminate debt and create an emergency fund. You can also acquire professional services from a debt management company to help you get debt relief.
You can initiate by working on your credit card debts, and start saving some funds for your new baby. You need to create a budget for your baby’s arrival.
You are required to save at least six months of living expenses in your emergency fund account. This can be a great support if you or your partner decides to quit a job for a while after the new baby arrives.
Plan a Comprehensive Family Insurance
Getting comprehensive insurance coverage is particularly recommended to expecting or new parents. You & your partner should review the existing life insurance plan, and switch to a comprehensive plan for growing family.
Perhaps, you already realize that term life insurance can be expensive on your end. Hence, you may want to get your hands on health insurance for your entire family.
Having a family health insurance plan can be advantageous in terms of;
- Offering affordable rates.
- Providing coverage for all the family members.
- Getting maternity coverage.
- Getting full or high coverage for a new family member added.
- Allowing your tax benefits.
Increase Your Earning Potential
When your family is growing, you need to ramp up your earning potential. You need financial stability in order to provide for your family. You can make salary discussions with the HR team at your current job. If you have been loyal to your job and fully qualify for it, then your employer shall respect your growing family needs.
Your employer will be interested in retaining a good employee. Therefore, it is recommended to do salary discussions. Other than asking for a raise in your pay, you can also negotiate on things like work hours, maternity/paternity leaves, vacation time, etc. depending on your personal needs and preferences.
Start Saving for Your Retirement
Last but not least, just as you become new parents, you need to start preparing for your retirement in advance. It can be beneficial in terms of how compound interest works. The sooner you start saving some funds for your retirement, the better it will be for you and your partner. You will need to invest less principal and get more returns.
If you are wondering how to start with retirement saving, then check on a company-sponsored retirement plan. It is one of the best options as you get to invest a pre-tax dollar. The company will then be contributing at a high rate (which is often more than you can invest in an individual retirement coverage).