Oh, baby! Becoming parents is a huge event in anyone’s life. Whether you’re thinking about having a baby or already have one on the way, there are steps you can take to make sure you and your family are financially stable when the little one arrives.
Create or Revisit Your Family Budget
If you don’t have a monthly budget, now is the time to create one! If you already have one, now is the time to revisit it. Look at what you are currently spending and compare it to your current income. Next, look at your spending habits. See where you could reduce spending in order to add baby expenses. For example, maybe you can eat out less, use Redbox or Netflix instead of going to the movies, buy in bulk, etc. Even small changes like this can give you wiggle room for monthly diapers and formula if necessary.
You may even be able to cut down on necessary expenses like utilities. Take shorter showers, unplug appliances when not in use, use more blankets in the winter so you can reduce the temperature slightly, and be more conscious of turning lights off when you leave a room.
Pay Down Debt
Paying off debt is another way to get more money in your monthly budget. If you have loans you can pay down or pay off, not only does it give you extra money in your monthly budget, but it also improves your debt to income ratio if you were to need an emergency loan.
Build an Emergency Cash Fund
Hopefully you already have an emergency cash fund of 3-6 months, since this is best practice whether you have a child or not. If you don’t already have an emergency cash fund, do not fear. Work on saving more and starting to build one. Every dollar saved helps!
Don’t Overspend on the Baby
If you think you have trouble not buying new clothes for yourself, wait until you have to try not to buy new clothes for your baby. Do your best to refrain from overbuying. Although the clothes are cute and tiny, try to remember that one baby can only wear so many clothes before he or she grows out of them. You will already have to purchase clothes for 0-3 months, 3-6 months, 6-9 months, 9-12 months and so on, which adds up. You can also pass on buying baby shoes for a newborn since they won’t actually need shoes for a few months.
Avoid shopping at expensive department stores and get as much gear and clothing as possible from friends and family members who have babies. Return unwanted gifts from baby showers so that you can get store credit instead of feeling guilty and keeping the gifts in a closet somewhere.
Later on down the road, even consider pureeing your own baby food instead of buying it at the store. Using an available family member or friend for childcare is another way to cut back costs once the baby arrives.
Think Through Any Large Purchases
Time to buy a bigger house? Time to buy a bigger car? Time to own a place instead of renting? Many times, when a couple finds out they’re pregnant or they start trying to have a baby, they decide it’s time to up-size. This is a common thought process, but it’s not necessarily always correct. You don’t have to own a place – it’s okay to still be renting an apartment when you have a child. You don’t have to buy a bigger house – at least not right now. Putting the financial pressure of buying a new home or vehicle on top of the financial pressure of having a baby isn’t always the best choice, especially if it wipes out your savings.
Think carefully about whether these purchases are truly necessary right now before making them. Will you still be comfortable with your monthly expenses when you add on a home or vehicle loan plus the new baby expenses? Will the required down payment leave you enough savings to have a sufficient emergency cash fund? Can this purchase wait until you have figured out what your finances look like with a baby?
Get Additional Budgeting Advice at Patriot Federal Credit Union
If you need or want additional budgeting help, our team of Patriot financial advisors are at your service. They are more than happy to sit down with you and help you see where you could save money and what kind of budget you need to have to live comfortably with your new little one. To team up with one of our advisors, call, visit one of our branches, or schedule an appointment online.