Becoming a parent is exciting, but it can be a huge stress on your finances if you're not prepared. Find out smart tips to save money and avoid common money mistakes that many new parents make.
Having a baby is supposed to be a joyous time, but it can also be emotionally and financially stressful. The average American family spends about $12,000 on child-related expenses in their baby’s first year alone. And raising a child to age 17 is estimated to cost a whopping $233,000!
To help you get a handle on what to do and not to do, I interviewed Andrea Woroch. She’s a mom and a nationally-recognized consumer and money-saving expert. Andrea regularly contributes to leading national and regional news stories and has been featured on "NBC's Today Show," "Dr. OZ," "Good Morning FOX & Friends," "MSNBC," "CNN," "ABC News with Diane Sawyer," and many print and online outlets.
Some of the topics we cover include:
- How to cut the cost of childcare
- Ways to earn more and stop living paycheck to paycheck
- Tips to raise cash by selling unused household items
- Best places to buy baby goods for less
- Getting maternity benefits and disability insurance
The following tips were provided by Andrea.
5 Money Mistakes New Parents Make
- Not saving enough.
- Under-estimating the cost of childcare.
- Ignoring life insurance needs.
- Spending too much on baby goods.
- Putting off college savings.
Here are five common money mistakes that new parents make and how to avoid them.
1. Not saving enough.
A recent survey from PurePoint Financial found that half of Americans do not have a savings target set within the next five years. If you’re expecting a baby, it’s especially important to create savings goals so you can cover time off from work.
Even if your employer offers a maternity benefit, it probably doesn’t cover your full salary. In addition, there are many new expenses you’ll have, such as childcare, health insurance, and everyday baby essentials.
You also need to have an emergency fund for extras or unexpected expenses that creep up. Those could include parenting classes, formula if you can’t nurse, and ordering take-out when you don’t have time to cook. Having a cash cushion will give you peace of mind that your family could get through any hardship.
Start saving from the moment you begin planning a family by automatically transferring funds into a separate account. Use a high-yield online savings account, such as PurePoint Financial, which currently offers 2.15% APY.
Bonus Tip from The Penny Hoarder
Here are four easy ways to cut your grocery bill each month. If you’re looking for more tips on how to save money on groceries, check out The Penny Hoarder.
- Skip shopping. Consider buying your groceries online.
- Download the Ibotta app. Apps like Ibotta will pay you in cash if you buy items associated with their app.
- Download the Shopkick app. Once you sign up, the app pays you in ‘kicks’ for walking into certain stores, like Walmart, Target, and more.
- Go generic. When possible, go with the generic brand of the product. Store brands now often include gluten-free, organic, and specialty items, but at a fraction of the price of big-name brands.