Starting a family is exciting, new, and tons of fun. But it can also be intimidating if you’re not fully prepared. Being mentally prepared is one thing, but what about financially? While we can’t help out too much with the mental preparedness part, we can definitely help in the area of financial planning for new parents.
Raising a child (or multiple children) is expensive. In fact, according to the U.S. Department of Agriculture, if your household earnings exceed $105,000, one kid can set you back $400,000 by the time he or she reaches age 18.
But don’t ever let money get in the way of living out your dreams of having a family. We’re here with a little financial advice for you new parents.
Begin saving for the things you know you’ll need. As soon as possible, begin saving up for those items you know you’ll need each month once baby comes. These things can include diapers, clothes, medical costs, toys, food, and formula.
Save for the unexpected. You can fully plan out exactly how much you think you’ll need for your child, but the fact is that children can be unpredictable. You may discover an allergy that requires spending a little extra on specific brands of diapers, formulas, food, etc. Or you may have some unexpected medical bills because let’s face it, kids are clumsy! Set a goal to have at least three months’ worth of living expenses saved up before the baby comes. Bonus: if you already have an emergency fund, set a goal to double it by the time he or she arrives!
Start early. As soon as you decide to begin trying for a family, start saving. Of course, life doesn’t always work that way, so if your journey started a little further down the line, it’s not too late! Wherever you are, begin saving now!
Practice living off of one income now. You’ll likely go on maternity leave. While some companies are extremely helpful and offer great benefits for maternity leaves, the fact is that a lot of parents aren’t offered paid leave. Plus, there’s the option of not going back to work once the baby comes. Whatever you decide, begin practicing living on one income early on. This can help you and your partner adjust before it’s too late and help prevent you from draining your savings account down the road.
Be smart about registering. It’s easy to get a little scanner-happy when you’re registering for items for your shower, but resist! Being smart about what you register for will help you cut costs and get those things you actually need, not just the cute items you so badly want. Stick to the necessities like a crib, diapers, a car seat, a stroller, clothes, and bottles. If you stick to fewer items on your registry that are all necessities, you’re much more likely to receive these than the many items you simply don’t need.
We’re excited for you and your growing family, and we’re here to help you save and spend within your means. Wouldn’t you rather focus on raising your child than on worrying about money? That’s what the Wela app is for. As soon as you decide to start a family, change your goals in the app and we’ll set a Daily Spend Limit to help you reach that goal before the baby gets here.