Having a child brings about intense financial changes for at least the next 18 years of a parent’s life, but that’s a pretty vague statement. What are those implications? How can you be sure that your budget accounts for every new change in your finances? Here are at least 10 ways in which a child changes your finances, all of which you should work into your budget to ensure that the baby’s needs are met without putting you in (too much) debt.
Entirely New Budget
The first and most obvious change to your finances is that your entire budget has to be revamped to include your child and all his or her needs. The best idea here is to scrap your entire budget and start from scratch. Not only will you need to account for the child’s needs, but you’ll probably be whittling down on some of your own expenses while increasing others.
If one parent is transitioning into a stay-at-home parent under the prospect of a new child, utilities are sure to increase. The lights will be on longer, the appliances will be used for more cooking, and things like electronic toys or baby monitors will increase the cost of electricity. A stay at home parent will also be using more water during the day both for cleaning and bathing purposes, and the heat will remain on when it otherwise would have been turned off by you or a timer before leaving for work.
Having a child means spending more money on groceries, whether it be baby food or organic products which suddenly seem more important than non-organic ones. When it comes to ourselves, we’re often willing to eat foods that are slightly lower in grade so that we can cut the price down. When a sensitive infant comes into play, many parents will no longer be willing to purchase inorganic foods just to save an extra dollar or two — but that extra dollar or two eventually adds up, especially when applied to multiple products in your shopping cart. Baby food, baby snacks, and formula will also fatten your bill. On the bright side, you may see a decrease in the amount of money spent on junk food, alcohol, and other frivolous purchases.
A new baby means new doctor’s bills. Your child’s health is important, and maintaining it means shelling out some serious cash for insurance and/or doctor visits. If your child is unfortunate enough to become sick, it’s nice to be able to reach into an emergency fund instead of cutting into your bank account or taking out a loan. Insurance is also very important, especially in the case that your child’s illness is more serious than just a simple cold or flu. You’ll also want to spend some money on trying to prevent illness, such as renovating rooms with poor insulation or questionable materials (lead, asbestos), buying air purifiers, or arranging a cleaner to come and deep-clean the residence.
Clothing and Furniture
The baby needs clothing and furniture. Clothing isn’t just limited to a few outfits; there are summer outfits, winter outfits, in-between outfits, and possibly even a small bathing suit to consider. Shoes and socks must also be factored in. The furniture encompasses a crib, blankets and pillows for the crib, any special kind of furniture needed elsewhere around the house. However, you may actually make some money in this area, since you may be overcome with the need to sell off some of your non-baby-friendly furniture. Folding beds or other furniture which may be hazardous to a crawling infant will most likely be on your front lawn during your next garage sale.
Misc. Baby Expenses
Toys. Baby-friendly soap and shampoo. Diapers. Diapers, diapers, and diapers. There are online calculators to help you figure out the cost of your new baby per year. There are some sites that estimate diapers to cost around $90 a month, which is over a thousand dollars yearly. The only way around this is to opt to use organic, reusable diapers. Most people don’t want to go that route because of the ‘gross’ factor, so it’s smart to prepare a budget beforehand — unless you want to be stuck using Mcdonald’s burger wrappers for the last half of December.
The Cost of Convenience
You should leave some flexibility in your budget to allow for the cost of convenience, which is basically what happens when your significant other needs new diapers immediately, leaving you with no choice but to buy pricey corner-store diapers instead of venturing out to a large outlet store for cheaper ones. There will be times when unexpected situations, such as running out of baby food or accidentally knocking over the rest of the night’s formula, will force parents to purchase more expensive items merely to save time.
With a new baby, the way you travel is forever changed. Besides the obvious cost of strollers (which can reach into the thousands), you must consider the ways in which you get from one place to the next. Drive a car? You need a carseat — and a good one at that. Take the train? You might find yourself considering expensive taxis instead of participating in the hustle and bustle of the subway with a newborn in your arms. Ride a bike? Not anymore! Consider your normal means of transportation and then ask yourself how the baby fits into that, if at all. Then again, you may actually wind up saving money — your baby can’t ride your gas-guzzling chopper, but it can certainly be taken out for a stroll in a stroller or one of those weird baby backpacks you strap to your chest.
Finally, an area where you’re saving money because of the kid and not spending more than you ever thought was possible. Unfortunately, it’s a tradeoff, and the sacrifice here is your free time. While you may not be able to spend as many late nights at the bar with your work buddies, your liquor bill will certainly decrease a lot. Random vacations, costly outings to restaurants and events, and other leisure activities will probably be cut down because of your child. In the process, you’ll save some cash and hopefully learn how to creatively give yourself the relaxation you need by reaching out to friends in the community for cheap (albeit fun) activities together.
The biggest effect a child has on your finances is possibly the savings that you should be working on from before the child is even born. Not only are you saving for yourself anymore, but you’re now responsible for the future of an entirely new person. Hopefully, you want to help your kid pursue a great education without them becoming suicidal beneath a mountain of student debt. Since college is a whole 18 years ahead of them, saving has to start early — especially since the cost of higher education has skyrocketed into absolute ridiculousness. Besides having a college fund, you want to make sure to have backup money in case of any type of emergency. When your child reaches his or her teenage years, you want to be prepared to wire them money or pay their ransom if they should ever get into trouble.