There’s no secret that having a baby is expensive. In fact, for a baby who
was born in 2018, parents could expect to spend an average of Php 754, 000
While getting ready ahead is key to manage a new born’s needs, there are
many unknown costs that can send even the most budget-wise parents into chaos.
However, with these money moves it will help lessen financial burden of
parenthood, so you can spend more time with your little bundle of joy!
But first, a warning: Becoming a parent is a very challenging roller coaster ride. It’s equally scary and exciting. Just be sure that you know that your expenses and income will change for years to come. It’s only up to you on how you budget things, prepare for any circumstances and be flexible in handling money.
Manage every cent. As a new parent, you may likely prepare for your baby’s basic needs such as diapers and milk, but there are less obvious costs that can cause budgets to soar higher, such as babysitting services, and emergency medical visits. This is why it’s important to better prepare for unpredictable expense and cut excessive spending.
Elizabeth Renter from “Managing Money, Personal Finance,” recommends using the 50/30/20 approach in dividing your income in a better way. 50% is for needs of your family such as household bills, child care, diapers and
food 30% is for the things we want to buy or financial wants.
And lastly, 20% is for saving for the future of your child or other unexpected events. This 50/30/20 approach can help you get a better idea on how your current budget breaks down. Once you made sure you organized your budget plan, track your progress from month to month.
But if you’re really tempted to buy a bigger house or a fancier car for your family, make sure to deliberately think about your decision. See if your really need a better house or you just want it. If you spend more on living expense, then it will put a strain on your household budget and cause more stress.
Settle your financial priorities. As a new parent, you may feel you need to rush for your child’s education, and that is exemplary knowing that college is becoming more expensive than expected. But this shouldn’t come at the cost of your current and future financial security. After all, you can borrow money for college, but not for retirement.
Once you have a small amount of emergency cash to cover unexpected expenses — say Php 27,500 — your financial priorities should be as follows:
- Retirement savings: To make sure you’re saving enough for the future, try to save once you retire from work. You should ideally set aside 15% of your income.
- Toxic debt payments: Pay off debt that is hurting you. Balances on payday loans, credit cards and title loans, for example, cost you daily and prevent you from focusing on other financial priorities.
- Practice living on less. When it comes to budgeting for parenthood, the keys are having equal parts of preparedness and flexibility. As said before, your income will surely change after having a child, even if temporarily. One parent might leave work entirely to take care of the child. Your income will probably change after having a child, even if temporarily.
- Anticipate changing expenses. As a parent, it is a life long journey to have a lot of expenses due to your child. From the day he/she is born until it grows into a woman or man. First it will be milk, diapers and bottle then it will be educational fees and food.
In the meantime:
- Estimate the amount you’ll spend in the first year of the coming of your baby.
- Make sure to add the needs of all your family members and also a small budget for unexpected events.
- Refrain from buying luxurious brands. If you may, buy secondhand.Shop around for child care. Make sure to get the things that are cost-efficient an quality-effective.
- Expect how long some expenses will last. Many expenses for first-time parents are one-time costs such as crib and strollers. Others will just continue for a few years,such as diapers until your child knows how to withdraw properly.
- Review upcoming expenses monthly. You don’t want to be unprepared, so find space in your budget as best you can in advance.
Start college savings now. By the year 2030, the cost of a four-year degree at a university is expected to top more than Php 19,250,000 ( $381,912). And that’s quite alarming for a parent who wants the best education for their child.
It’s never too early to start saving for college, Godwin says, noting that if you open a dedicated, tax-advantaged college savings account (like a 529 plan) now, you’ll have up to 18 years to grow the amount and take advantage of the tax benefits.
Budgeting is never easy to everyone; but with great dedication you can save up to more money than you can imagine. Being a parent is a surreal feeling that needs equal parts of preparedness and flexibility for your family to get the basic needs they need. So if you have a baby coming in your way, then better save up for your future! You don’t know what the future will be in stored for you so better be prepared.
Pro-breastfeeding. Natural ways always beats the artificial ways; and breastfeeding is way better than formula feeding. Not only that the mother and baby will be nourished by abundant health benefits, but it will also be beneficial to your pockets. Formula costs about Php 2,000 ($40) a week depending on the brand, compared to the all-natural and peso-free breastfeeding.
Ask help from families. Family and friends are always there for us. So if they have a child who’s already grown out of her crib, ask if you can borrow their baby stuff. Borrowing things for your baby rather than buying them saves you tons of money. It also helps you to have a bigger budget for the other needs of your family.
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