Financial changes will always be present in your life. This is simply because nothing in life is constant. As everything around you changes, so would your finances. Once you start using your own credit card, you will experience how it is to get monthly statements and pay off just a portion of your balance or the whole bill in one go.
As soon as you go to college, student loans will be a topic you cannot stay away from. Once you start taking out these loans to pay for your cost of attendance, you will have to repay them back at different times. This depends on the kind of loan you take out. Once you get married, you will also start to take on multiple types of debt.
These can all have varying effects on your life and introduce financial changes in your budget. As you get married and start to build a family, one of the biggest stimulus of change in your finances would be having children. CDC.gov shares that in 2014, there were almost four million childbirths in the country and you could be one of those families welcoming a new member.
It is best to have a financial timeline and plan out how you grow your family including having kids. However, there are changes you can plan for and there will be situations that will catch you off-guard. As you prepare to have children or if you already have a toddler in the house, here are a few things you expect when it comes to your finances.
Desire to stay at home is one of the financial changes
This is more prominent with mothers but it can manifest with the dads. As soon as you have children, there seems to be an inner desire to stay at home and care for the kids. You want to be with them during their firsts as a baby. Catching that first smile, first crawl or first walk and even their first tumble is priceless as a parent.
The stress point in this desire is having to give up a steady pay if you are employed. It means that you would have to make do with a single income from your spouse. Provided they do not want to do the same thing as well. This is tough regardless if you just started a new job or have been at it for quite some time.
If you really want to be a stay-at-home parent then there are things you can explore to help you with financial changes in your life. As your income would take a hit, you can augment your budget with a side hustle. You can take on some online jobs you can perform for a few hours a day or even monetize your hobbies.
Need for a bigger house
When you got married, a one-bedroom space would be enough for the both of you. But as you have children, this might prove to be a little more difficult than you originally planned out. You would need to look for a new place that would be big enough to accommodate a bigger family. As exciting as this can be, there are a lot of factors you need to consider.
As the Federalreserve.gov shares, mortgage debt has been increasing year on year since 2012. This can be interpreted in a number of ways but it can also mean more and more people are taking out mortgage loans. As it remains one of the most sought after dream of people, having children and a growing family is one of the reasons people take out mortgage loans.
As this happens, there is no doubt on the financial changes it will introduce on your finances. Mortgage payments oftentimes take the top spot in any budget when it comes to the payment amount. On hindsight, it also usually that one debt payment that has the lowest interest rate. This is because it is a secured type of loan. As you introduce mortgage payment into your budget, you need to clear a big amount from your income to meet this financial obligation.
Change of neighborhood
This could be far from your mind when you are newly married and focused on your respective careers. Where you live could be dictated by the proximity to your office. However, once you start having children, this can all change. There will be considerations you have to factor in when you put your child’s needs as a priority in regards to your living conditions.
Living in the city in a building and close to your office means it is easier to get to work but once you think of your children, this could change. You might start to think of how nice it would be to have a backyard for your children to play in. They can also grow up with other children in that neighborhood that you choose. Education also starts to factor in when looking at where you want them to attend school.
When you decide to live in another neighborhood, you would definitely encounter financial changes in your budget. From the amount, you need starting from moving in up to getting all settled in your new place. You also have to think about your transportation cost to and from work and even taxes and insurance in your new home.
Considerable increase in expenses
There is no doubt that as you have children of your own, your expenses would go up. You would see your grocery budget go up. This is because you need to add a few more items in your list for your baby. What some couples forget to factor in is that their food intake could change as well. From having more coffee to keep up with the baby to the mother needing more nutrients to pass on to the baby during breastfeeding.
Other utilities will also start to increase as you take care of kids in the house. You might find that you have to increase savings as well. This is in preparation for birthdays, planning trips and other life events with your children. These factors would definitely introduce a lot of financial changes in your life and make you look at your budget a little differently.
College savings plan
One of these saving goals for your children would be for their college education. As Forbes.com explains, the student loan debt is now at about $1.31 trillion. It ranks second to mortgage debt and has overtaken credit card and even auto loans. This is why helping your children prepare and save up for costs in higher education is a good idea.
There are a lot of parents trying to balance this with their own retirement. But there are a few ways to get that college plan started. There are tax-advantaged funds like the 529 plan that can be a big help when your children start in college. You can also help guide with how to properly save up for their own college needs.
There are a lot of financial changes that you will encounter when you start to have children of your own. The best thing to do is to plan and prepare as much as you can so you are not caught off-guard with the expenses that will crop up.