The cost of raising a child as a new mom can catch you off guard. It did for me when I had my first one nearly eight years ago. Keeping up with my usual expenses while trying to juggle new ones, such as daycare and diapers, became overwhelming. As I packed on debt, I watched my once-solid financial well-being go out the window. But now, thanks to a few simple rules and a total budget transformation, this mom has become a debt-free hero!
As a new mom, you will need to be prepared to replace old expenses for new ones
From the moment you become a mom your money will no longer feel like your own. Suddenly, you're swapping manicures and hair appointments for onesies and play dates. But being aware of these upcoming expenses can help you plan for them.
One of the biggest shocks that new moms face when they return to work is the high-cost of child care. You can spend a whole year waiting for your income to “return to normal” only to find out that now one-third of it is now going to daycare. Toronto — the most expensive city for daycare in Canada — averages over $1,600 per month for babies, and $1,100-1,400 for toddlers and preschoolers.
To avoid the dreaded daycare debt, start looking into your options as soon as possible, and consider family members or trusted neighbours who may be able to help out. (Maybe you can share a nanny with a neighbour.) You may also qualify for subsidy programs, so be sure to contact a local daycare centre and check your city’s website to find out.
To avoid debt, expect regular, day-to-day expenses to increase over time
Then there are the expenses that increase with age: Food, clothing, dental care, school trips, extra-curricular activities, vacations, and entertainment. These items start off as cute, little add-ons to your bill when the kids are young, but as they get older these expenses take on a life of their own! If you want to keep your finances from flying high over the years, be prepared to spend a little more on these items once your kids are out of the toddler stage, and even more in the teenage years.
Finally, there are the expenses that may not seem urgent but can be important to your family's future, such as life insurance and RESP contributions. Depending on your situation, you may not be able to afford all of these expenses right away. But keeping them in mind as future goals will help motivate you to cut back on unnecessary spending or increase your income. All of these changes can be a lot to adjust to, but it’s nothing a financial supermom can’t handle!
Create a new budget and update it regularly
A good working budget is extremely important to your financial fitness—it helps to ensure that you have enough money to cover the important expenses in your life. Keep it somewhere easily accessible, such as on your smartphone, and review it often, especially when an unusual expense pops up or a current one changes.
Yes, budgeting means there may come a time when you're forced to choose between dance classes for your daughter or a second vacation for the family. But, it’s a decision better made now rather than borrowing money later in order to pay off both.
If you haven’t already put a budget in place, a Credit Counsellor can help you create one for free.
Be resourceful to increase savings and disposable income
Comparison shop and clip coupons using apps like Flipp and Checkout 51, and take advantage of loyalty and points programs that are offered at your favourite stores.
Accepting gently-used hand-me-downs, such as furniture and clothing, can also help keep your family and finances fabulous. Plus, selling your kids’ old items is an easy way to earn extra cash. Use social media to search for any mom groups in your area that can help you with money-saving programs like clothing swaps and carpooling.
Avoid “spoiling” your kids
Not only can overindulgence throw a wrench into your otherwise healthy budget, it can be damaging to your child's future financial habits. Be careful of the precedents you set when you treat or reward your child. If you buy her a fancy new toy just for being good at the mall today, then a measly ice cream cone won't cut it next week.
Instead, help your little ones start developing their own financial superpowers. Teach them the value of shopping around or waiting for something to go on sale. Explain that you can buy him one chocolate bar from the vending machine now or two for the same price at the grocery store later.
And remember, there is absolutely nothing wrong with telling your children that you can't afford something or that it has to be earned. It won't destroy their childhoods, trust me. Instead, it will give them realistic expectations for the future and motivate them to work hard so that one day they too can be a financial superhero.
If you need extra help creating a new budget and managing your debt, give Credit Canada a call
If you would like to get help with your finances or have already fallen into unwanted debt, call Credit Canada today at 1.800.267.2272 to set-up a free counselling session with a certified Credit Counsellor. All of our counselling is 100% free, confidential, non-judgmental and there's no obligation. We can go over your current budget and help you develop a new one as a new mom, all for free!