When you have your first child, everything changes. Absolutely everything. Your perspectives on life, your goals, your priorities, your (cough)sleep patterns. Everything. But you won’t realize this until you see them for the first time and hold them in your arms. That’s when it happens. It’s like being hit across the chest a hundred times, and the hardest thwack of all is the money thing. Oh, yeah. For all that incredible and exhilarating emotion, you feel, you can suddenly find your new financial perspective somewhat daunting.
Not including college, they say the cost of raising a child to eighteen in the USA can cost anywhere between $250,000 and $455,000. Gulp. That’s enough to make any new parent feel a little stressed about their finances.
But don’t despair, because you are not the only people in the world losing sleep over this, nor the most worse off people to ever raise a happy healthy baby. All you need is a few bits of advice:
Set Your Priorities Straight
You know when we said everything changes, we meant it. Most people find their goals in life shift once they become parents. As such, know what your goals as a couple are so that you know what you are working toward and prepare for the future and beyond that much better. What’s more, schedule in regular chats with each other to see where you are with these goals, what progress you are making and whether it is still the priority. It could be the aim is to save for their college fund, or to get a down payment for a house together or your retirement package. So know what your endgame looks like and stick to it. If saving is stretching you too thin, then don’t save. Come back to it next year. There is nothing wrong with that.
The Budget You Can Stick to
According to those who offer financial advice for a living, the trick to being able to stay financially stable is to have more coming in than you have going out, and that is where a budget pays dividends. As such, we recommend you know your lifestyle, know what you can maybe cut or reduce, prepare a budget based on that and always track your spending to make sure you are meeting your plan. If spending habits change for whatever reason – childcare, a second child, whatever – make a new budget that includes these changes. Saving money is a habit that is totally based on trial and error. So don’t get fed up if you don’t get your budget right first, second or even third time around. Keep trying and until you find one that works for you.
Prepare With An Emergency Fund
When you’re young, free and without any responsibilities but yourself, they say you should have an emergency savings account of $1000. A buffer if you will. This is approximately $1000 more than 46% of American’s. When you become a parent, however, we recommend you have an emergency fund that will cover you for a minimum of three months expenses. Life has a way of throwing curveballs in your path – job loss, medical bills, new washing machine breaking, a pipe bursting – and that is when it will really help you and your sanity to have an emergency fund you can dip into.