Make smarter financial choices and prepare financially for your new bundle of joy
Parenthood is quite the adventure, but feeling a bit overwhelmed by the financial responsibilities that come with it is completely normal. The arrival of a new baby brings immense joy and excitement, but it also brings a host of new expenses to consider. From diapers and daycare to college savings and beyond, the costs can quickly add up. But fear not! In this guide we’ll explore eight realistic money-saving tips tailored specifically for new parents, helping you navigate the financial landscape of parenthood with confidence and ease.
1. Start saving now
Having a baby is a huge financial undertaking. Especially for first–time parents, the financial element of it all can be a shock. As soon as you find out that you are having a baby, it’s time to take a thorough look at your finances and create a financial plan to help you make your way through it all.
Take a look at your employer’s policies surrounding leave and understand how much time you will be able to take, how much you can expect to be paid, and what financial gaps may pop up for you once your baby is born.
It’s also important to do the same with your insurance policy. See how much you will be financially responsible for after your pregnancy if it’s not covered by insurance. Start saving now for what you’ll need in a few months.
If you have an emergency fund, it’s time to give it a little cushion. If you don’t have one yet, make sure you make this a top priority for you financially. Set aside enough money in an account that could cover between 3-6 months of your living expenses with a baby. Talk to other people with babies to get a more realistic understanding of what your cost of living may look like after you have your baby.
2. Get your estate in order
Your estate plan can protect your family and your assets in the event of your passing. You should create a will that designates guardians for your children and how to distribute your assets.
You should also have a power of attorney to designate another person to make financial and medical decisions on your behalf if you weren’t able to do so yourself. Review all of your accounts and update any beneficiary designations for life insurance policies, retirement accounts, or other assets.
With an updated estate plan, you can rest assured that your family and your accounts are protected.
3. Buy as you need to avoid overspending
As a new parent, everything revolves around your baby. Excitement may take over as you’re shopping and you may end up with more than you really need. While it may be tempting to stockpile things you think you’ll need in the future, it’s better to focus on what you and your baby need in the immediate future rather than, say, a year from now. You won’t really know what your baby will need in the future until you get there.
4. Save money on second-hand items
Babies can be so picky and they grow so quickly that they may only use certain toys or items for a few days or weeks before it’s old news. You can often find barely-used items for a fraction of the price of buying them new.
Some things you may consider buying second-hand may include:
Gently used clothes
Baby gear like strollers and high chairs
Changing tables and dressers in good condition
Toys and books
Check places like Facebook Marketplace, garage sales, and thrift stores first for any items you can get secondhand before buying new.
Any time you purchase something second-hand, be sure the items meet safety standards. Evaluate any damage and be sure to check for recalls. Properly disinfect everything before you use it, and it’s as good as new!
While you can save some money on secondhand items, there are some things you should skip the thrift store for. Both for safety and hygiene, here are some items that you should always buy new:
Car seats - If a car set has been involved in an accident, it may no longer be safe to use. Always buy car seats new to ensure they are up to safety standards to protect your precious little one.
Mattresses - Secondhand mattresses might hold mold or bacteria that could pose a serious health risk for your child. Your crib mattress should be firm and supportive to keep your baby secure while sleeping.
Breast pumps - Even with thorough cleaning, breast pumps can be contaminated with bacteria.
Teething items - Pacifiers, teething toys, and anything else that comes into close contact with your baby’s mouth should be bought new.
Baby food and formula - Open or partially used baby food or formula could be contaminated. It’s always best to buy these new.
Always use your best judgment when buying secondhand, and keep your baby’s safety centered.
5. Buy your frequently used items in bulk
While it’s a bit more of an upfront investment, wholesale prices on your frequently used items often can’t be beat. Invest in a membership to a wholesale store like Costco, BJ’s, or Sam’s Club. Do the math and see if it’s a more cost-effective option to buy things like diapers, wipes, formula, and other essentials for your baby in bulk. You may save a penny on your household essentials that you’ll use a ton of like laundry detergent, toilet paper, and cleaning supplies.
6. Invest in “grow-with-me” equipment
Certain equipment is designed to adapt to your child’s growth and development. This type of “grow-with-me” equipment may stick with you for years to come, so it may be smart to invest in certain adaptable equipment early on so you don’t have to worry about constantly buying new as your child’s needs change. Things like convertible cribs, strollers with multiple seating options, and adjustable baby carriers may be worth the initial investment.
Not everything needs to be top-of-the-line, egregiously expensive, though. Find options that meet safety standards, work for your needs, and fit within your budget.
7. Find community and ask those around you for help
Try to make friends or connect with other people with babies. People with children of their own will often have a pretty big surplus of items they realized they didn’t need or that their children outgrew.
Join your local “Buy Nothing” groups or other social groups designated specifically to help parents. Lots of people are happy to pass down items they no longer need to others in their community.
8. Think about the future
In terms of your child’s future, it’s never too early to start saving here either. Even if you start small at first, you can make big strides financially toward your child’s future by making smart investments.
Nowadays, a standard savings account may not be the smartest choice to invest. Instead, you may want to consider investing your money in other types of accounts that can do more for your money than what’s possible with just a savings account:
529 College Savings Plan - This tax-advantaged account grows contributions tax-free and can be used tax-free for qualified education expenses.
UGMA account - This custodial investment account allows parents to invest money for their children and manage it until they reach adulthood. Once of age, their child gains full control over the UGMA account and can use it at their discretion.
Brokerage account - Opening a brokerage account in a child’s name to invest in stocks, bonds, and mutual funds can be a great way to grow investments for your child.
Do some research into other account types and investment options and consider setting aside money for your child’s future in your financial plans. You may open multiple accounts to help save and invest on your child’s behalf.
You can start small with saving for your child’s future at first, and make bigger strides down the line. Put portions of bonuses or savings aside in these accounts and watch them flourish.
By implementing these savvy money-saving strategies, you can ensure your family’s financial security while laying the groundwork for a bright and prosperous future for your little one. So, buckle up, enjoy the ride, and take pride in knowing that you are making the best decisions for your family’s financial future.
