Budgeting for Baby

There are few experiences in life that are equally exciting and intimidating as becoming a parent and welcoming a new life into the world. No one truly knows what to expect or whether they will live up to their own standards of parenting, and that uncertainty is completely normal. What is certain, is the fundamental change to daily life and the way you will plan your family’s future. 

Roles within the household will require more flexibility, as partners need to be there for one another more than ever before, and single parents may need to reach out for help from family and friends. The saying “it takes a village” is certainly true, and it’s crucial to recognize the people who make up that village. While the first-time parenting experience can feel uncertain, there are precautions that can be taken to prepare for the inevitable financial challenges ahead.

Small Savings Have Big Effects

·      A newborn is exciting, but don’t get caught up in buying all the new baby “stuff”. There is only a small window of time in which many toys and clothing items will be used, and even then, some may never make it into the rotation. This can lead to unnecessary expenses and the future chore of finding ways to donate large amounts of unused items. 

·      Budgeting in small ways has some of the largest impact on your baby’s life in the long run. Keeping an eye on what you buy is always good practice, but when you have a new member of the family, there needs to be some wiggle room for unexpected expenses.

·      Keeping an emergency fund accessible is something that all families should practice, but it is particularly important when you have a young child. There is no way to predict life’s many challenges, but staying financially prepared is one way to stay ahead of the curve. Consider setting aside a small amount from each paycheck into a dedicated rainy-day fund.

Saving for the Future

·      With the ever-increasing cost of tuition, it’s never been more important to start saving early for your child’s higher education. Creating a savings plan that keeps your current financial needs in mind is imperative in maintaining a steady flow of funds towards future college expenses. Even if your child is an academic superstar and receives a full scholarship, these funds could help cover additional costs.

·      Much like education savings, consider contributing to a health savings account or (HSA) for healthcare expenses such as doctor visits or medical issues. This can also benefit multiple members of your household. If you are fortunate enough to have medical insurance, be sure to account for the changes in cost when adding a new family member to your plan. 

·      Whether you are hiring a professional or filing on your own, taxes and the credits you receive are important elements to consider. Having a child may lower the taxes owed to the IRS, and you may be eligible for additional credits as well. These funds are intended to directly benefit your child’s care and upbringing and should be used accordingly. This built-in benefit exists to support families, so be sure to take advantage of it when possible.

Non-Financial Budgeting

·      Not all budgeting is financial. Parents need to prioritize budgeting their time by planning and scheduling routines for their families. Of course, you will always be there for your children, but you need to remember to be there for yourself as well. The inevitable burnout that comes from overworking yourself will only be a detriment to the family ecosystem, and you owe it to yourself and your family to meet challenges with a fresh mind.

·      Similarly, be sure to budget time with your family and your partner. This means allowing family time to focus on being with your baby, creating bonding experiences, and strengthening connections. Likewise, spending time alone with your partner when you are able can be invaluable to your relationship. After all, one of the most impactful things a growing child can see is a healthy parental relationship.

It’s Never too Early to Plan

Much of this advice may seem obvious, yet many families delay planning or saving until their child is much older. Others may feel they simply don’t have the money to save. While this may be true to an extent, small, consistent actions can still create opportunities–financially and otherwise. 

At the core, every parent wants what is best for their newborn, and whether this is your first or fifth child, a little bit of planning can go a long way. Baby steps taken towards a final goal will always keep you moving in the right direction and give your baby a brighter future, so the main thing is to stay consistent with positive habits. Save what you can a little bit at a time and your future self will thank you for it.