Having a new member in the family cause drastic changes to the overall budget. When it comes to raising your children, emotions will come into picture and this could exacerbate existing financial problems. Parents seek to give the best for their children, but it doesn’t mean that you can go broke while doing it. Here are things parents should do to manage their finances:
1. Don’t cave in to parental pressures:
You certainly won’t compromise the future of your children, if you don’t by all the gadgets and toys. With common tools and methods, your children can still be smarter and less fussy. It’s still possible to achieve a lot of things with available tools.
2. Plan for new costs:
Parents will be especially tired when they have a new baby. It can get so tiring that everything feels like a sleep-deprived blur. Eventually, you feel that it’s time to hire a lawn service or a maid, so you won’t be so overworked again. However, such a convenience will come at a cost and this will add an extra spending to the family budget.
3. Pad your emergency savings:
If you have a new baby, unplanned expenses will definitely crop up. The stroller that you purchased recently isn’t the right fit to your baby. Sometimes, your baby can get a mild fever and it would be convenient if you have a fully funded emergency fund.
4. Don’t buy too much for the house:
The decision to purchase a house often precedes everything and in this situation, it is important that you take into account your future expenses. You will incur additional expenses after you have a new child. If you use your common sense when buying a house, you should have enough cash to finance your young family.
5. Don’t always buy new things:
You shouldn’t buy the entire wardrobe for your children. The nursery and toy box shouldn’t be filled with new things. It’s very common for first-time parents to overspend, because they want to buy new things all the time for their new babies.
6. Check tax breaks:
You will spend more money if you miss out on the tax breaks, because child care can be quite expensive. In this case, you should let the government blunts some of the costs. Tax breaks may seem like a drop in the bucket compared to what you have spent, but it is obviously better than nothing.
7. Don’t delay saving for college:
Soon, you will drop your older children at the college and it’s important that you begin right away. Even if you can afford only a small amount right now, it’s better than nothing. When saving for something, time can be your best friend or your worst enemy, depending on when you start saving.
8. Continue funding for retirement:
It can be quite tempting to stop funding for retirement when you are struggling to make ends meet post delivery. However, it is not advisable to do this. Just like with college funds, you should continue saving for the retirement fund.