Being a parent can be a rewarding role, yet a roller coaster of emotions and challenges at the same time. Having a child completely changes your lifestyle, which can affect other aspects of your personal, professional and financial development. While it can take a little bit of time to fully adjust to parenthood, it’s important to be conscientious of your health, time and money.
In the scope of financial wellness, parents often experience a huge shift in spending after the birth of a child. Clothing, diapers, wipes, car seats, strollers—you name it! These necessities can add up and become a burden if a devised plan for your savings isn’t implemented. If you’re not careful, the tendency to overspend can occur and result in not having enough money to properly provide for your family.
Here are some common financial challenges parents face with helpful solutions:
Creating a Reliable Financial Plan
It can be quite nerve wracking not knowing how much cash is going in and out of your account, especially as a parent with many responsibilities on a daily basis. Those who struggle with their finances often find that they stem from other challenges that are associated with their career, time management, or an imbalance in their priorities with what to spend and save on.
Diving into your financial accounts, current budget, pay stubs and debit or credit card usage can all aid the process of creating a successful money plan for you and your family. After gaining insight into your current financial status, separate your spending tendencies into categories in a notebook, excel sheet or through an app if you're smartphone savvy. These can be labeled as clothing, food, childcare, insurance, or medical payments. When these are separated, you’ll be able to better view how much money you're allocating towards each bill.
To make your budget something that you’ll actually stick to, utilize resources that can help you maintain long-term financial stability as a busy parent. Online services, such as a budgeting platform or checking account app can give you a second chance banking option without added fees through challenging times or bad credit. Financial apps can send you notifications associated with your balance, spending plans and payroll to help you stay on track with what you owe, and with how much is in your bank account.
Finding Budget-Friendly Childcare
Depending on whether or not you’re planning to return to work after maternity leave, childcare could be a necessary expenditure. This will most likely be one of the largest expenses you’ll have to endure. While you can hire nannies yourself and most likely pay them under the table, a more consistent service or daycare facility usually requires a consistent payment—adding up to be more costly overtime.
If you know you need a daycare facility to help you during the workday, allocate this into your budget and ensure you have enough saved ahead of time to make timely payments. If you work for a company that provides benefits for new parents, check in with your human resources department to review all of your options. Some employers offer adjustable spending accounts or credit-friendly options to help you through your child’s expenses. If remote work flexibility is an available option through your company, see if you can extend your maternity leave to be able to build your savings even more while spending quality time with your baby. While the common duration of this is three months, some managers offer plans that allow for an additional month at home.
Creating an Emergency Fund
An emergency fund acts as a safety net if a financial emergency were to occur, like a hefty car payment, house repair, or doctor’s appointment. More often than not, new parents live life without an emergency fund as a backup or only use a credit card for unexpected costs, which can result in a heightened financial crisis while also dealing with taking care of a child.
Take the time to communicate with your bank or a financial representative about the steps that are required to create an emergency fund. Through setting up this account, you can automatically contribute a certain amount of money to your savings every month. Automatic contributions are the way to go! You won’t ever have to worry about remembering to add money to this account and it makes saving money simple and time manageable.
Signing Up For Health Insurance
After the birth of a child, health insurance covers their first 30 days of life automatically depending on if you’re still under your parent’s health insurance. During pregnancy, it’s important to add your child to an existing plan so delivery costs are covered and that you’re not entering motherhood with any added financial stress.
If you’re pregnant and uninsured, look into inexpensive assistance through community health centers that specialize in family care and creating health insurance plans. Also, look into your employer’s health insurance benefits to see if they align and qualify with your life event. If you’re under the age of 26, you should be able to be dependent under your parent’s plan until you're covered under your own too, and if you’re already under your own health insurance, examine your current plan to see whether or not you need to upgrade to a provider more suitable to your child’s health.
Becoming a parent is a significant lifestyle change. Financially, it’s important to prepare yourself for whatever life can throw your way. Build a budget that you’re proud of and that you know will work for you and your family, and use reliable resources that aid the process of being the best mom you can be!
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