Having a baby is no doubt a life changing event. Most people are prepared for the lack of sleep as well as the morass of bodily fluids that will likely be thrust on them, but not everyone is prepared for the radical change that must take place to their financial life. Most new parents anticipate that they will be spending more money on diapers and formula, but supplies are only the beginning of financial changes when your little one arrives. Keep reading to learn about how your finances will change once your bundle of joy makes his or her debut.
Balance That Checkbook
Once you have a family to provide for, it is no longer acceptable to live on Ramen Noodles for the last three days before payday. Draft up a budget in the coming months before baby arrives, and stick to it after the arrival of your bundle of joy. Stick to it, and you will be surprised at how much money you have left at the end of the month. You’ll need to be stricter about saving and spending if you plan to provide for your little one in the beginning and for years to come.
Slush Fund No More
Once you have a baby, the concept of discretionary spending goes out the window. Forget about having the latest gadget or game for your X-Box, or shopping bags full of new clothes every few weeks. Baby comes first, and with baby comes diapers, formula, clothes, toys, and the like. You’ll still want to have a buffer fund for emergencies, but you’ll be spending money on your needs—not wants. This is why having a set budget is essential before the baby comes.
Becoming a parent forces a certain level of maturity and introspective thinking. Opening a credit card bill to a long statement with a large balance just isn’t what it used to be. Paying off debt leaves room for a rainy day fund, a bigger house, or a safer car—all of which will be expenses you’ll start to consider as your family grows. By instituting a realistic budget and avoiding splurging on the “want” purchases, you’ll be able to pay off debt little by little. Although you may feel like you have too many expenses with the new baby to be paying your debt off, you don’t want to get buried even deeper. Even paying off a little every month will get you closer to being debt free, which will allow you to support your growing family.
Preparing for the Worst
You hopefully already have health insurance, car insurance, and perhaps home or renters insurance. Having your first child is a time to think about getting life insurance if you don’t already have it. According to the professionals of Underwriters Insurance Brokers Ltd. who specialize in life insurance in Vancouver, you make room in the budget for a term life insurance policy equal to ten times your annual income. Not only will this prepare your family for an untimely death, but it will give you peace of mind to know that your child will be taken care of should something happen to you.
If you and your spouse work, daycare will likely need to factor into the financial picture. Though you’ll be looking for bargains on diapers and strollers, daycare is not the place to go bargain hunting. Quality daycare services can be pricey, especially if both you and your spouse work 9-5 jobs. The sticker price on daycare causes many couples to evaluate the cost benefit of one spouse staying home with baby while the other works.
As a new parent, your life will change more than you currently realize. While some of these changes will be exciting and rewarding, others will be stressful. Start making changes in your financial habits and structure before your little one arrives, and you will have one less thing to stress about. Taking charge of your spending and saving will make it possible to live comfortably as your family expands, so as you make financial adjustments, use your children as motivation for making wise choices and investments.