Becoming a new parent comes with new responsibilities, such as making sure your little one is emotionally cared for as well as financially cared for. According to the U.S. Department of Agriculture, recent data projects that middle-income families will spend on average $233,610 raising a child from birth to age 17. This can be pretty intimidating for first-time parents as you will need to consider everyday budgeting needs and future investments. Fortunately, we’ve curated some tips to help ease the stress of new parent finances.
Begin Building an Emergency Fund
An emergency fund is one of the best ways to prepare for the unexpected in life, especially when it comes to a new addition to the family. Saving three to six months’ worth of living expenses places you in a better position to provide a financial safety net for your family to fall back on in unexpected times. Saving for unplanned bills is also more likely to help you avoid taking on debt through loans.
Pay Down Debt
Speaking of debt, before welcoming a new baby into your life, it is a good idea to pay off or even consolidate your debt. You may have accumulated debt from any number of places, including credit cards, auto loans, student loans, and more. Paying the money off quicker and more efficiently is a great way to free up room in your budget for new baby expenses. Greater Niagara FCU can help you out with debt consolidation through a balance transfer onto our Visa Credit Card.
Redo Your Household Budget
A new baby most likely means a new budget, as little ones come with all kinds of expenses you may have never dealt with before including diapers, formulas, medication, etc. The American Academy of Pediatrics shares that families spend about $936.00 on diapers in the first year (Healthline). However, your budget should also include childcare costs such as babysitting services, and medical expenses in case of an unexpected trip to the ER. Think about your monthly sources of income then compare that to your monthly expenses in order to figure out where to start. If you need a little help finding where to budget, consider skipping pricey membership subscriptions, and make sure your credit card isn’t charging you high fees. If it is, look for a credit card with fewer fees and greater rewards.
Purchase Life Insurance
In the wake of tragedy, it becomes increasingly important to have a claim to life insurance in order to continue financing your family’s well-being. Life insurance is meant to replace lost earnings in the event of death and can help pay for living expenses such as school tuition, weddings, and more.
For new parents, new challenges come in all shapes and sizes, one of the most prominent challenges being financials. However, with some everyday budgeting and long-term financial planning, you can help financially prepare your child for the best.