The Parents’ Budget: How It Changed After Kids Arrived
Written by: Jinny Blitz
Most first-time parents get overwhelmed with how difficult—and expensive—it is to give your little one the very best that they deserve. The USDA revealed that parents have to spend as much as $264,090 to raise a child in the urban northeast, while single parents with lower incomes pay an average of $172,200 for their child’s needs. Of course, this number can increase further, since every child has their own unique set of circumstances and needs. As a new parent, you can prepare for your family’s future by considering these essential expenses and budgeting tips.
Important Expenses That You Need to Consider
Your household budget will drastically change once you start having children. For instance, a single person can get by in Washington, DC for just $3,550 per month. On the other hand, if the house is composed of two parents and two children, then you will have to pay $10,331 monthly to live in Washington, DC! This budget includes allocation for the following essentials:
- Child care
- Health care
- Other necessities (personal care, apparel)
Financial Tips for Parents Who Are Starting a Family
1. Budget Your Money Accordingly
It can definitely be crazy expensive to raise a child, which is why it’s important to learn how to budget as soon as you can. Manage your money properly by taking note of all the essential expenses for your family—then make these a priority. This means that you have to let go of some of your wants to ensure that your household income exceeds these important expenses.
But if it’s the other way around, consider how you can cut costs! Some families thrived when they lived in more affordable neighborhoods, while some mommies borrowed maternal clothes and baby garments from relatives and friends. Consider various cost-cutting strategies to ensure that you can allocate your money properly for your family expenses, emergencies, and savings.
2. Consider All the Benefits You Can Reap
Now that you’re a parent, you need to take advantage of government and employer benefits that will help you and your family. Parents are entitled to the child tax credit, which accounts $250-$300 for each child, according to CNN. Companies like Amazon, Apple, and Facebook also offer employer-based benefits, like child care and educational assistance! All these amazing benefits will help you and your partner save a lot of time and money.
3. Invest in Your Family’s Future
You’ll feel more at ease once you know that your family will be ok in the future. For instance, a life insurance will ensure that your financial dependents will be taken care of, in case unfortunate events occur. Though your child won’t be entering college anytime soon, Marcus notes that opening a 529 accountwill safeguard their future and help them pay for higher education expenses. By the time your kid goes to college, your child can use your tax-free contributions for their tuition fee, school fees, and room and board. Finally, don’t forget to invest in your future! Keep contributing to your 401(k) so that you will live a blissful post-retirement life, knowing that your family will be fine.
4. Create a Payoff Plan for Your Debts
In our article on ‘15 Financial Tips From Working Mom to Working Mom’, one of the mothers emphasized that it is important to tackle your debts. Mortgages and car loans can bring a lot of convenience to your family, but you have to be responsible in paying them off before the interest builds up! She recommends trying either the snowball or avalanche method, so that you can get started with eliminating your loans.
It’s not easy to start a family, but it will definitely be worth it when you see that your children are happy and loved. Just make sure that they will grow up healthy and safe by managing your finances properly.