Financial Advice for New Parents
The decision to have a child is undeniably life changing. As in, literally every aspect of life will change, and that means your finances too. Children have a way of magically zapping their parents' finances as quickly as they do their energy. Luckily you can protect yourself from it happening so much by following these tips:
Pad your emergency savings
We would normally recommend most people need three to six months' worth of living expenses in an accessible emergency account. If you're somewhat behind on your emergency savings, now's the time to up your game and get saving! This is especially true if you're a single parent or one-income family. Imagine what might happen if you got fired? Now it’s not just you in the picture that you have to worry about. The more you add to your emergency fund, the more protection you have from the unexpected.
That said, don't be discouraged if you can't contribute more than a few pounds a week. Even an extra £200 over the course of a year might go a long way in the event of a financial emergency!
Create a new budget
Did you have a budget before the baby arrived? If you did, that's certainly a good start. But now that there's a new little person in the mix, those numbers are going to change whether you like it or not. You need to consider things like diapers to clothing to feeding supplies and child care (which is a major point of financial stress for so many new parents.) On the other hand, you’re going to spend a lot less money on night life and going out. Say goodbye to the life of drinking and debauchery!
Once that baby arrives and you start to get a sense of how much you're spending, sit down and create a new budget that more accurately reflects your expenses. It'll help you track where your money is going and help you identify more cost-saving opportunities as you navigate life as a new parent.
Automate your savings and/or debt payments.
This is always a good idea, but especially with a baby on the way. First you should identify what your financial goals are as you will be more likely to make steady progress toward them if you set up automatic payments and/or deposits. By automating your savings or debt payments, you are prioritizing your goals and forcing the rest of your life to fit around them. This will help you work out your budget for the little one on the way!
We encourage our clients to be great financial role models for their kids. The sooner you start, the better as this is something not even taught in schools!
Have you had any financial struggles since you became a parent? Tweet us @MACFinancial