Having a baby is exciting. As a new parent, you have read all the books and prepared yourself for every waking moment with your new addition.
One thing the baby books might forget to mention is your finances. After all, one parent typically takes maternity leave, which means your household income could drop. If that same parent does not return to work or only returns part-time, you might just find yourself in budget distress.
Children will change your existing financial lifestyle – regardless of whether you work or not. Therefore, it is imperative that new parents understand how to properly revamp their finances and save so that they do not find themselves stressing over money when they should be filling their hearts with joy. If saving isn’t in the budget, that’s okay. Just try your best to stay afloat over the first couple of years. There will be time to save later. The important thing is that you don’t go further into debt.
Expert Tips for Balancing Finances with a New Addition
Your new baby will add to your monthly expenses, from the cost of diapers, to formula, strollers, car seats, toys, clothing, and all the other supplies they need. While your costs go up and income might go down, you can mitigate the hit you take by considering the following:
Eliminate Debts – Reduce your debts as much as possible. With a new child, you have time off work to consider extra expenses each month, and not a lot of wiggle room in your budget to save money. The more efficient you are at paying off your debts, the easier it will be to tackle other expenses as a new parent.
Start a College Savings Plan – If you plan to finance your child’s higher education, now is the time to invest in it. In fact, contributing the maximum amount to a registered education plan to receive the full grant is the best thing you can do.
Plan for Daycare – Now is the time to research how much daycare. will cost if you intend to return to work after the baby is born. Daycare costs can quickly eat up any surplus income you currently have in the budget; therefore, saving your surplus now to help offset that cost is important.
Maximize Contributions – After you have paid your expenses, any surplus you have should be prioritized into your employer retirement-savings program (RRSP). This helps you take advantage of employer contributions, which are critical.
If you are a new parent and are drowning in debt, we can help. Contact our office today for a free, no-obligation consultation.
