The news of a new baby never comes alone. It brings happiness, joy, excitement, and nervousness along. While the parents-to-be are thrilled about the new life entering their lives, there is also a tinge of panic. After all, a baby means significant responsibilities and changes in your lifestyle. You won’t be able to catch a movie or hang out at the bar like you used to. Another aspect that worries most parents are the financials. Those tiny toes and fingers can put a serious dent in your savings and continue to consume a lot more in the future. The good news, however, is that you can keep your finances intact with proper and advance planning. Let’s look at some of these ways that can help you out in this situation.
Budget for the baby
If you haven’t been budgeting for your expenses, now may be a good time to do so. As per several studies, the cost of raising a baby can go upwards of $20,000 in the first year itself. This includes the cost of diapers, formula, daycare, clothes, etc. To account for this, you may follow the 50/30/20 rule. This means you must keep 50% of your income for necessities like baby products, food, utility bills, etc. 30% should be kept for your wants such as eating out or buying designer items. Whatever the case may be, you must always strive to save at least 20% of your total income. The best way to make a successful budget is to save first. You can make adjustments in your needs and wants to account for the baby’s expenses. This may take some time and a few iterations to get it right.
List your financial goals
A baby may change your priorities. You would want to start saving for your child’s education and even buy a bigger home in the suburbs. However, these goals should never take precedence over your retirement and emergency fund. After all, your child can avail a student loan but no lender will lend you money for your retirement. Utilize 401(k) to the maximum that you can. Secondly, try to pay off the unpaid debt so that it doesn’t compound to exorbitant levels in the future. Lastly, set aside some money for emergencies. After all, you never know what the future holds for you. During such circumstances, a little money in your bank account will be a good cushion to fall back on.
Practice living on one income
A baby could mean certain changes to your income. Firstly, the parents may have to take some time off to look after the baby. The mother may even decide to take a long sabbatical to deal with any health issues or to simply spend more time with the baby. To prepare for such circumstances, it is a good idea to save one income and try living on one income. This little exercise will give you a taste of reality and you may even get an idea if it is doable.
Make a baby registry
It is always a good idea to make a baby registry when you host a baby shower. Make a smart list with all the baby necessities like a car seat, crib, stroller, diapers, etc. Do not get swayed into listing expensive clothes or toys. Of course, their cuteness may steal your heart away but a baby will outgrow them even before you know it. This will certainly save you money in the long run.
If you have a friend or a relative whose baby is all grown up, you may ask to borrow a crib or a car seat. Do not hesitate as they will be only happy to put their child’s things to good use. This will certainly save you a lot of money. Also, recycling and upcycling is the new in-thing.
Do not buy unnecessary items
If you scan the market, you will see a ton of unnecessary baby items that are not even important. For instance, wipe warmer and diaper genies. You can talk to other parents to know if you will really need them. Skip them if you feel you will be good without them.