If you’re expecting a baby or you’re a fresh parent, cheers! This is an extraordinary stage in a woman’s life. But with the joy of a new family member comes fresh duties, and that includes financial responsibilities. When I became a mother for the first time, my financial perspective underwent a massive shift. Suddenly, I was responsible for a little person’s every need. I had to transition from being dependent to being a provider, and that translated into my approach to finances.
Avoidance of financial strain is crucial as a new parent. Here are some key monetary strategies to bear in mind, and implement when the time feels right:
1. REMAIN FOCUSED ON YOUR FINANCIAL OBJECTIVES
Before becoming a parent, you likely established financial goals that didn’t account for children. Do everything in your control to stay focused on these objectives. Having a new child in the household doesn’t mean totally overhauling your financial plans. Despite the added costs of child-rearing, you can still grow your net worth and enjoy vacations – though your destinations might vary. Most importantly, as a parent, you can continue your education and develop new skills. While your child will be a high priority, it’s essential to strike a balance in achieving your personal goals as well. A vision board can help you stay on track with your financial goals amidst the new family arrangements. This visual representation of your goals, located somewhere you see it daily, can be a great motivator to devise new budget strategies considering additional expenses and inspire you towards your goals.
2. INVEST IN ADJUSTABLE GEAR
Children grow rapidly and purchasing things that grow with them can be a great money-saving strategy in the long haul. A good example is strollers that function both for infants and toddlers; ones that come with infant car seats that can be detached as they get older. Besides considering versatile items that offer plenty of mileage, try to disregard the societal pressure of expensive designer labels. Spend more quality time with your child at each stage of growth instead of investing in fancy items that’ll soon be outgrown. Buying quality items on discount or secondhand can offer excellent value.
3. PREPARE FOR PARENTAL LEAVE
Planning for parental leave in advance is advised. Familiarize yourself with your company’s parental leave policies – the duration and compensations. Companies increasingly offer paternity leave as well as maternity leave, and if married, alternating leave periods may be effective. However, the decision is yours. If company-paid maternity leave isn’t provided, building an emergency fund before the baby’s arrival can be beneficial. You might also explore some manageable home-based side hustles for extra income during your leave such as completing online surveys, website testing, or online writing.
4. LEARN ABOUT YOUR HEALTH INSURANCE
Health insurance can be a perplexing expense. Get a good grasp of your insurance paperwork and anticipate the forthcoming healthcare costs you’ll be held accountable for. A Dependent Care Flexible Spending Account could save some money on your child’s healthcare costs. An existing Health Savings Account (HSA) can also help cover some medical expenses. Most importantly, never ignore your medical bills. Engage with your provider and arrange for installment payments to deal with any balances not covered by insurance. Often, no interest is charged on such arrangements.
5. CREATE OR REVISE YOUR WILL
If you already have a will, all you need is to update it to include your newborn. Consider your possessions and assets, what you’d want inherited by your child in case of untimely demise, and most importantly, who you’d wish to be their guardian. If you don’t yet have a will, now is an excellent time to create one. Digital platforms like LegalZoom can be a convenient starting point for setting up your will and appointing an executor. Having a will prevents potential family disputes over your possessions and stops the court having to assign your child’s guardianship.
As a new parent, you should also look at life insurance options; term life insurance is an affordable option and will be cheaper if you’re younger.
If you’re a parent already, what wise financial moves have you made? If you’re planning for a child, how are you financially preparing for the role of parenthood? Let’s discuss.
