Money Mistakes "Every" New Parent Needs to Know About and How NOT to Make Them...
Congratulations, you’re a parent! Now what? Becoming a parent for the first time is terrifying, exciting and expensive. Some parents have meticulously planned for the arrival, while others handle the intimate details once the baby arrives. A number of costly mistakes arise for new parents while they get settled and rely on a few hours of sleep. Some financial mistakes occur before the baby is even born.
What Budget?
Perusing the baby aisles at your local Target is an experiment in resistance for most new parents. Everything is cute and deemed necessary for your upcoming bundle of joy. One of the mistakes new parents make is not making a budget. Likely the more money you make, the more you will spend because of increased expandable income. New parents think that their baby needs everything. However, you should make a list of necessary items, not additional items that are simply adorable.
Enjoy Gifts and Freebies
As new parents, many family and friends will probably like to buy you gifts. New parents should stockpile freebies like gifts from baby showers, coupons and samples. However, another money saver is to not buy everything new. Take advantage of gently used baby clothes from relatives and allow grandparents to spoil your little one. It’s wise to keep a detailed list of what you need and want; when the baby shower comes or when people inquire, you can tell them exactly what you need and save your money.
Buy What You Need in Bulk
Another tip to avoid spending too much is buying in bulk. Supplies like diapers, formula and baby wipes can really save you money if you buy in bulk, as opposed to buying these items at your local drugstore.
Save Improvements for the Older Years
New parents also have a tendency to get caught up in renovations before the baby is due. Having a fully prepared nursery is ideal, but don’t go overboard. Keep in mind that this is a baby’s room, and it is highly like that you will be spending more time in other rooms than the baby’s. The baby cannot tell whether you purchased a luxury changing table. Instead, save your money for meaningful renovations when your child is older.
Looking Toward Your Baby’s Future
The joys of parenthood have set in, and the fear of the next 18 years prompted you to think about security. There are certainly several things new parents must think about in terms of their child’s future. First, adjust your life insurance policy. Now that you have a child, you’ll need more insurance to protect your family in the event of your untimely death. Experts say that the amount of life insurance should be four to five times your annual salary. Consult a life insurance agent for quotes and deciding on whether term or whole life insurance is best.
Disability insurance could be a mistake if not considered. This insurance comes in handy if anything should happen to you. Some employers offer disability insurance that pays 60% of your salary if you become disabled. Examine a policy that would allow you to cover your expenses and current living situation.
New parents have approximately 18 years before they have to think about college, but saving for college should start within a few years of their birth. Talk to a financial planner about options to save for college. Some programs allow you to contribute $25 a month with tax-free growth.
If, prior to the pregnancy, you met with an attorney to draft estate planning documents, you may want to consider updating them. Wills aren’t just for families who are wealthy. If something were to happen to either parent, legal documentation needs to designate who the guardians and beneficiaries are. Probate can be an exhausting and lengthy process if either parent is left without a will. A will outlines who will manage and distribute your assets. Make things easier on your family and have a will drafted or updated soon after your child is born.
Parenting is a discovery process and sometimes mistakes are made. If you stay cognizant of what you are spending and who to protect, likely you will make the right decisions for your family.
