Disclaimer: This post is sponsored by PSECU, a Pennsylvania-based credit union.
Right about the time co-workers start to wonder whether their cubicle-mate is expecting or just gained a few extra pounds, many moms-to-be panic. The No. 1 worry new parents face after hoping their baby is born healthy is fear their finances don’t quite measure up to the pricey demands of child-rearing.
Part of the reason raising a new baby brings financial anxiety? Many first-time parents overspend on items they could easily borrow from others or even go without altogether. Knowing where to spend your hard-earned money can make the prospect of a new family member less stressful financially. Simply study these strategic tips to learn how to save more for baby by using money wisely.
Many new parents-to-be labor under the assumption that they must buy everything ahead of time. Nothing could be further from the truth.
First of all, family and friends often gift many needed items at the baby shower. In addition, stocking up too much prior to birth leaves little wiggle room when the real expenses start rolling in. Even newborn babies have preferences, and stocking up on toys and clothing they may reject or which may not fit properly makes little sense, especially when finances are tight.
Sure, you want to gear up your baby like a Kardashian kid, but pause a minute for honesty. Babies don’t care about the latest bling. Take advantage of this by buying the majority of your child’s clothes secondhand.
Kids grow incredibly quickly, so many thrift stores and consignment shops boast collections of gently used children’s clothing. In addition, moving sales and garage sales often have kiddie clothes bargains. Don’t overlook family and friends who may have hand-me-downs for you.
Beg and Borrow
Speaking of family and friends, before breaking out the credit card at BuyBuyBaby to furnish the nursery, check in with family members, friends and co-workers. Many of them have attics chock full of old baby furnishings they’ll happily let you borrow.
When investing in new furniture, look for pieces that can do double duty. No rule says you must have a changing table, for example, when a regular dresser with a changing pad will do. Cribs which convert into toddler beds make more sense to invest in than buying both pricey items separately.
Brown Bag It
Everyone has heard that packing your workday lunch saves money, but the savings truly do add up quickly. The average worker spends about $2,746 per year on lunch. Going out to eat costs an average of $11 compared to packing from home, which amounts to about $6.30.
Rent a Room
Growing families with an extra bedroom or two can pad their baby budget by renting out that spare room. Commuters make for excellent short-term tenants, as many seek inexpensive lodging where they can stay during the workweek before heading home for the weekend. Such an arrangement also provides private time when homeowners still have the property to themselves.
Another option includes listing the spare room for rent on Airbnb or VRBO. These services give homeowners control over when to list their rooms as available.
Prepare for the Unexpected
Even the best budget divas sometimes meet with unexpected expenses. Having a baby doesn’t come cheap, and one illness or accident can bankrupt young families.
Smart parents-to-be check to see what their health insurance does and does not cover even before conception. Giving birth in the United States costs nearly $10,000, and complications arising during childbirth quickly drive costs even higher. Paying a bit more monthly for additional coverage may prevent a hefty hospital bill down the road.
There’s an App for That
Don’t overlook apps as savings helpers. Apps such as Ibotta and the Target app help customers save money by applying manufacturer discounts and offering rebates when lower prices appear elsewhere.
In addition, apps such as Acorn help consumers turn their spare change into a diversified investment portfolio. When one links their debit card to the app and spends $5.25 at McDonald’s, the app withdraws the additional 75 cents and invests it in equities and bonds.
Recent changes to the tax code may impact how couples plan for children. One change involves doubling the standard deduction while doing away with the personal exemption. This may mean lower tax savings for couples who have multiple children, as previously, the personal exemption granted an additional $4,000 per child.
However, a silver lining exists. The Child Tax Credit has doubled from $1,000 to $2,000 per child per year. This credit is refundable, meaning even if a couple’s tax liability lowers all the way to zero, taxpayers still receive the credit, meaning more cash in their pockets.
Breast milk passes on critical immunity-boosting proteins and other essential nutrients from mother to baby. Not only is breastfeeding healthier for baby, but it also saves parents a small fortune in formula. As a bonus, breastfeeding helps hormones return to normal in the mother and may assist in shedding those baby pounds more quickly.
For the truly cash-strapped, consider making baby food at home. Babies can eat nearly anything adults can as long as it’s chopped finely or pureed. A blender or Ninja makes creating delicious baby food recipes a breeze.
New parents face enough stress when welcoming a new family member, and financial woes only add to this pressure. By planning smart before birth, moms- and dads-to-be can prevent financial pitfalls from detracting from the joy of bringing their baby home. Intelligent financial steps can help parents focus on what’s truly important — bonding with their little bundle of joy.
PSECU, a credit union in Pennsylvania, has created this graphic with more information on exactly how much it may cost you to raise a child — check it out!