With baby on the way, expecting parents always have great expectations. But overspending without financial planning often accompanies all the enthusiasm, and that can spell trouble. That’s where smart personal money management comes in. It can make for a happier, more secure home when baby arrives, and as baby grows. Here I offer some financial planning advice for new parents.
Bring wise spending to life, too.
Initially, plan your spending around the first few months after your child’s birth. Think real needs and you can avoid dishing out too much on unnecessary baby bells and whistles. Create a shopping list of items in order of importance based what you can realistically afford. As you are budgeting, remember that wee ones could care less about “lifestyles” or “designer labels” and require mostly just love and nurturing. As kids quickly grow, clothes, toys, and fancy gewgaws soon fall by the wayside.
Put baby’s needs into the framework of the gifts you might get from others. Don’t hesitate to tell family and friends exactly what they might buy for your child. After all, who needs a dozen baby blankets and a crib full of rattles? Also, consider how maternity leave – generally running 44 weeks for mothers according to Statscan – will affect your finances. Look into the subject and potential paid benefits for expecting parents by visiting http://www.servicecanada.gc.ca and searching “maternity leave.”
Look at the full baby picture - financial planning.
All of the above should fall within a written, monthly household budget covering your family’s spending and income, again putting needs before wants so you know your limits. Take into account short, medium, and long-term life goals for baby and the whole family. Check out the online tools here, which can help you track spending and follow a budget if you aren't already doing so.
Grow happily through long-term planning.
The best financial planning should include vital needs such as life insurance and perhaps extended health insurance. With your child’s future in mind, put a high priority on savings and investments. Consider starting a Registered Education Savings Plan (RESP). This way, for instance, you can get a big jump on college and university costs, which continue to skyrocket.
Think about opening a bank and a savings account for baby, too. Over time, a child’s savings can really fatten through your contributions, perhaps through later contributions from your child, through gifts from family and friends, and through compound interest.
If you’re up against it, be resourceful.
For expecting parents who may be challenged financially, frugality is a must. Be resourceful. Look for deals, always. Clothes, accessories, toys, etc. can be had through hand-me-downs from family and friends, or through visits to swap, consignment, and discount stores and online exchanges. Meanwhile, bulk buying and batch cooking can keep wee ones affordably well fed.
Don’t be shy to ask anyone about free and low-cost goods. Just smile and say you’re planning your finances for the little one on the way.