Financial expenses will always be part of everyday life and it just changes depending on where you are in life. This means that your expenses, while you were just starting out in college, would be a lot different when you already have a job. From credit card expenses and paying for the cost of attendance in college, that would quickly change when you get a job. You would find yourself looking at rent, utility bills, transportation and food cost and even saving up for your 401(k).
With this in mind, you need to remember that as you get married and start a family, one of the most exciting stages in your life is when you become a parent. Knowing that you are bringing in a new child into this world can bring in mixed emotions especially if it is your first child. Your whole world will turn upside down and you need to be able to adapt quickly.
When this happens, your financial expenses will change as well. It would be a lot easier if these changes are just a matter of moving funds around. However, the fact that you are bringing in a new member to your family simply means additional costs. In addition to this, it also means that you need to make changes not only with your present finances but future plans as well.
The Center for Disease Control and Prevention shared that in 2015, there were almost 4 million babies born in the United States. As parents celebrate and anxiously await the start of this new chapter in their life, they also need to look into their budget. There will be financial costs that will add up to their existing ones as well as new expenses being put in.
At first, new parents could be too focused on guessing if they are having a boy or a girl. They then move on to fixing up the child’s room putting in decorations fit for the gender or perceived interests. Next up is the name – parents spend a lot of time trying to come up with a name for their child. In all these excitement, they could overlook the financial part of planning.
If you are expecting a new baby in your family or you have a young one already at home, here are some of the financial expenses you need to be aware of.
Cost of delivering the baby
One thing you might have noticed at this point was an increase in your food cost even when the baby was still on the family way. This is because the mother needs an extra of just about everything. From food intake to supplements to visits to the doctor, the mother needs an extra of them because she is living for two. This might have already affected your expenses without you noticing it. This is because the increase in spending can be minimal at the most. However, it could add up over time and could blindside you with the changes at the end of the month.
Add the cost of actually delivering the baby when the baby is due and you could be looking at a big bill. From the different doctors that will help deliver your baby to the delivery room to the room you will be staying in at after delivery. These will all have a bill before you leave the hospital and you need to prepare for these financial expenses.
Increase in basics necessities
As soon as you get home, your expenses will start to get bigger compared to past months. For one, food cost, as well as utilities, could start to run up. You also need to factor in the needs of the baby. This can be new clothes from time to time and even diapers you would need every week.
If you start on formula milk, you would then be surprised how that puts a sizeable dent in your food budget. If you are unprepared for these expenses, you could end up using your credit card to cover the cost. The problem is that people are starting to rack up again on their credit card debt. CNBC shares that average credit card debt for consumers in 2016 was over $8,000.
As you have a new baby at home, it is wise to start adjusting your budget to incorporate these expenses and more. Sit down as a couple and try to look at the existing as well as forecast possible financial expenses that would add up to your budget. As you do this, you get to adjust and prepare your expenses and be able to avoid debt as well.
The need to get a bigger house
One of the things that parents need to consider as their family grows is looking for a bigger place to stay in. A two-bedroom house might not cut it anymore when you have three or more children. This is where a new house can come into the picture. This is tricky depending on your current housing situation.
If you own your current house, you can opt to sell it and move to a bigger one. Though this means that you have to uproot your family and take them away from the neighborhood and friends. One thing you can consider is to renovate the house to add more rooms. This, of course, takes into consideration the floor area you can work on and the cost.
If you are renting then it is just a matter of looking for a new place to stay in. Bear in mind that as you would now require a bigger space, everything would go up as well. This means your rent would be higher as well as other household expenses. You just have to prepare for it ahead of time so you are not caught off-guard when you are already settled in your new place.
Financial expenses could mean a change in vehicles
One of the financial expenses that you need to seriously consider is upgrading your vehicles that you use. Prior to having kids, you might be sporting fast cars that are meant to impress other people. However, children might not be comfortable and such cars and safety should also be your top concern.
This can mean adding a new vehicle together with your existing ones so you can keep them. However, you need to look at your budget to see if you can afford a second or third car. At the most, you can sell or let go of your existing vehicles for a bigger one. This way, you can save by having only one car for the whole family. It just takes getting used to and scheduling who gets to use it on certain days. Just remember to be prepared when getting a car loan to save of cost.
Adding to your reserve funds
As you take on the role of being new parents, one of the financial expenses you need to seriously look into is your emergency fund. As your family gets bigger, you need to adjust your reserve funds as well. This is because your expenses will go up. It only follows that your emergency stash needs to be able to cover for more people in your household.
The idea with reserve funds is to consistently save up a portion of your income every month for it. Unless you get your hands on some windfall money, looking at the total amount you need could stress you out. It is best to divide them up over a period of a few months so you can save up for it.
Creating a college fund
As you see your child grow, you only want what is best for them and give them a great start in life. One of the ways to do that is to help them stay away from student loans. If they cannot totally avoid it, at least give them a fighting chance in lowering it down. This is where a college fund comes in to help.
You save up for your child’s future college expenses so they have something to use when the time comes. You can look for investments that can grow over time or you can just save the money in the bank. It is even possible that you look at a 529 plan as SEC refers to them as a tax-advantaged savings plan for college costs.
Retirement savings get a little tougher
As you proceed to save up for your own retirement, it could get a little more challenging when your financial expenses are bloated. However, you need to remember that saving up for your own retirement is also a great way to help your children in the future. As much as it can serve as a financial cushion for you, it can do the same thing for your kids.
Financial expenses will get bigger as your family grows bigger as well with the arrival of a new baby. This makes it all the more important to be able to prepare for it. This helps you can enjoy the bliss and happiness the baby brings without worrying too much about the costs.