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5 Tips for Preparing Financially for Kids

The excitement of welcoming a new baby into your family can be one of the most infectious feelings. The anticipation and wonder of the nine months before birth make pregnancy a time to cherish. But while you’re attending doctor’s appointments and readying the nursery, set aside time to prepare your finances as a parent.

While some baby-related purchases are optional, many are not. And some parents find themselves surprised by the costs associated with expanding their family. You need to anticipate known life changes and do your best to plan for those you don’t know about. With a plan, you can relish the calm before your new baby arrives, confident that you’re financially prepared.

1. Get Real About Your Budget

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Before you can sort out what you can afford, you need to know where you stand. Review your last three to six months of spending habits to get a good read on your normal. Export your debit and credit transactions into a comma-separated values file.

Bucket your purchases into categories and find an average monthly expenditure. If any categories seem overblown, take note as you consider areas to trim to accommodate for child-related expenses.

Discuss your banking and credit accounts with your partner and determine whether you’re satisfied with your current lineup. As a new parent, you’ll likely be making more purchases for items like diapers, clothes, and groceries. According to Chime, a debit card that offers a round-up savings feature can make saving a no-brainer. By automatically rounding up baby buys to the next dollar and sending the difference to savings, it can grow your nest egg as you nest.

2. Assess Upcoming Expenses

Have you ever priced a car seat? If you haven’t started searching for the highest-rated safety gear yet, you may want to sit down. Baby safety gear is nonnegotiable and is often one of the biggest expenses you’ll have before childbirth.

Create a list of essential and optional purchases using online research and feedback from parents you trust. Social media algorithms are notorious for suggesting “must-have” products for your baby that aren’t truly essential. Get input on your list from peer parents and your obstetrician to get a read on what’s worth investing in.

If you can, fill your baby registry for the essential items and share your priorities with family members and friends. Many close relatives are willing to share the cost of high-dollar items and give them to your new family. While baby decor and clothes are precious, a car seat and safe crib come first.

3. Discuss Your Family’s Financial Priorities

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Using your recent spending habits as a starting point, determine whether your usual monthly income can cover your upcoming expenses. More often than not, new parents need to make adjustments to their habits. Dining out, entertainment, and shopping categories may need to shrink to accommodate your expanded family.

Babies are easily portable, but exhausted parents may prefer to stay home. Review how this behavior shift may change your dining out bills into bigger grocery buys or delivery orders. Discuss what factors are most important to you — saving time, minimizing workload, or reducing expenses are valid points to cover.

Be sure to consider savings goals, future income shifts, and how your plans may change. Be aware that infant care is one of the largest expenses you’ll take on. Monthly costs range from approximately $450 in low-cost Mississippi to over $1,700 in pricey Massachusetts. Project the impact of any planned or possible shifts so you can make informed decisions for your family’s financial position.

4. Be Realistic About the Long-Term Financial Commitment of Parenthood

Nevertheless, the panic-inducing sticker shock of childcare, accessories, and education, new parents should view their financial commitment as an investment. Safety, security, and physical and mental well-being are among the most important gifts a parent can give a child. But the promise of security doesn’t mean that you should give your child anything and everything.

Providing for your child’s health, safety, and psyche is more than enough, so don’t fret if your budget is tight. Experts agree that safe and loving relationships are vital for children’s health. As you consider the financial commitment ahead, remember that what your child needs most is you, not things.

Spending money on medical care, clothes, and childcare is inevitable, but a balanced budget can ease your stress. Develop a savings strategy that allows for meaningful vacations, anticipates emergencies, and prepares for the future. When you’re ready for both good and bad surprises, you can weather the expense without panic.

5. Start Practicing Your Post-Baby Budget Now

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Budgets always look good on paper, but it’s the application that really puts them to the test. Once you’ve agreed on one-off and long-term expenses for your growing family, it’s time to stress-test them. You may be tempted to have one last hurrah before your baby arrives, but hold back for this exercise.

Start a new month mimicking your post-baby budget, tracking expenses closely. As you’re mimicking nonexistent expenses like diapers and childcare, stash that money in your savings account. Label your account transfer so you can track what each deposit means to your practice budget.

If this exercise results in any overblown expenses, make adjustments to rebalance your budget. This safe application of your future spending can call to attention any trouble spots before reality sets in.

Lose Your Sleep to Late-Night Feedings, Not Money Worries

If there’s anything to know about parenthood, it’s that you should expect the unexpected. From the uncertainty of childbirth to the unpredictability of the newborn phase, it’s important to be flexible. While you can’t predict how well you can function on limited sleep, you can make moves to ease your stress.

Money is one of life’s biggest stressors, and the responsibility of parenthood can compound its impact. Take time to prepare your financial standing now just as intensely as you dream of nursery designs. When your baby arrives, you’ll be able to soak up every magical moment, confident your financial situation is in order.

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