What an exciting time! Becoming parents for the first time is akin to getting swept away by a whirlwind of experiences. We start preparing for the arrival and plan our future lives by accommodating all the advice for new parents given freely. We plan and prepare for all that the baby and parents would require to make lives less stressful. From the car seat to the burp cloth and the right shade for the nursery, we immerse ourselves in getting everything ready to experience picture-perfect parenthood.
However, in all this planning, almost everyone forgets to think and keep aside time to sort out one of the most significant aspects of our lives that will be affected by the baby’s arrival. No one tells you how expensive it is to have a baby and how your expenses will skyrocket.
The US Department of Agriculture estimates that a middle-income American family will spend an average of $233,610 on raising a child from birth to age 17. Don’t be thrown off by the figure. The fact is that preparing financially for a baby requires some planning, which you have at hand, and we have put together some recommendations to help you with the financial transition to parenthood. Here are a few tips for saving money as new parents.
1. Before The Arrival
Setting some financial goals before your little bundle of joy arrives is essential. The first few days are a blur of sleepless nights and diaper changes, so it’s best to take some time out before the baby is here to ensure the finances are in order, and then you have fewer things to worry about. It includes taking a hard look at your current financial situation and ensuring that you are prepared for the costs of raising a child.
2. Pay Off Your Debts
If you already have debt, such as credit card debt or student loan, make it a priority to pay it off as soon as possible. The sooner you pay off your debt, the less interest you must pay. Another advantage of having no debt is that it will give you some breathing room in your budget once the baby arrives.
3. Open a Savings Account
One great way to begin putting together your financial safety net is by opening a credit union savings accounts for your child. You can open a 529 Plan, a tax-advantaged savings plan designed specifically for college savings. You can either contribute regularly or make a one-time contribution to the plan.
4. Start an Emergency Fund
Unemployment is generally stressful, but it is especially so when your family is expanding. Having an emergency fund stashed away for a lean patch is essential. As a thumb rule, save at least six months’ worth of living expenses in case of an emergency. This fund provides a comfortable cushion for a new parent while looking for a new job and is especially important if your family is living on a single income.
5. Purchase Term Life Insurance
Purchasing term life insurance is another crucial step in creating a financial safety net for your family. This will provide financial security for your family in the event of an untimely death or disability. One frequently asked question is whether or not buying life insurance is worthwhile – after all, we all want to be around for a long time. However, if your family is financially dependent on you, the answer is simple, yes!
Establishing financial safety for your family is important, especially when a new member arrives. You can ensure that your family is well prepared for the future by setting your financial goals, paying off debts, opening a savings account, and building an emergency fund. Becoming a parent is a life-changing event; make sure you and your family are prepared for it so you can enjoy this phase of life.