Baby Boom or Bust: Financial Planning for a New Baby
Written By Angelo Silva
Published on Jun 15, 2012
Reading time 3 mins
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The arrival of a child is a profound and joyous occasion, but you should also be prepared for some significant changes in your life. It takes a lot of care and effort in raising a child, so you would need to make some adjustments in your lifestyle, particularly with your finances, in order to see to your baby’s every need.
When planning a budget for your baby, it is best to start saving as early as possible. Start to set money aside once you have decided to start a family or as soon as you find out that you are expecting. This way, you would already have worked out your finances by the time your baby is born. Consider the things that your baby would need, such as a crib and other baby items. You may be able to save a lot by purchasing used baby items, or you may be lucky enough to receive some as gifts from family and friends. Other baby necessities that you should be saving for include diapers and baby formula. You may be able to save on baby formula by breastfeeding your baby. Besides, breast milk is still best for babies.
The first step in planning your baby budget is to list down your monthly income, as well as all of your expenses. It would be easier for you to plan your budget when you keep track of how much money you are earning and how much of it you are spending on a regular basis. It is important to determine if your income can adequately cover for your baby’s expenses. If not, you should refrain from making unnecessary expenditures. After all, the baby’s needs must come first. Sift through your monthly receipts in order to decide which of your expenditures you can afford to cut down on. For instance, if you usually go for the much costly branded products when you go shopping for groceries, you would be able to save a lot more money if you choose to buy generic brand products instead.
Compute your bills following the birth of your baby in order to verify your total expenditures. Expect to see an increase in your grocery, utility, and insurance bills after your baby’s arrival, so new expenses should be calculated and written down. Your new bills should then be subtracted from your present income in order to find out whether you will receive extra income or if you will require financial help. There is no shame in the latter, and seeking financial help may enable you to save more money in the long run. You may consult with a professional financial planner to find more efficient ways of assessing your bills and cutting costs.
If you receive extra income, invest those funds in long-term investment vehicles such as mutual funds. There are several types of mutual funds where you can place your money, depending on how conservative or how aggressive you are when it comes to investing. Make it a habit to invest on a regular basis because doing so will help you save money for your child’s education. Parents do face financial challenges when it comes to their children’s needs that’s why it is advisable to start saving for them as early as possible.
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