Ask any parent and they will gladly confirm without hesitation—kids change everything.
Becoming a parent is an immense blessing that changes our view of the world, our capacity to love, and our priorities. As such, having kids can drastically change our finances. Adjusting to the new norms and overall financial impact of raising a child can be a challenge. These six financial tips can be a helpful guide to any couple who is preparing for or has recently become a new parent:
1. Continue To Give Generously
It is natural for any parent to want to give everything they can to their kids in order to offer them the best possible upbringing. While this feels selfless (and it is), it cannot take the place of selfless giving to the Church and to the Kingdom. We are to give our first fruits to God. This shouldn’t change after having kids.
2. Preserve Savings As Much As Possible
New parents continually face the “need” to make significant purchases such as cribs, car seats, and strollers, just to name a few. This will rapidly deplete savings if these purchases are made impulsively and without foresight. Instead, start with a list of big purchases on the horizon. Prioritize the list, and then get creative with how and where to find savings.
For example, infant items have a very short useful life. By searching your local Facebook group or Next Door app, you can often find slightly used, quality baby gear at a fraction of the price. Our family has purchased cribs, rocking chairs, strollers, high chairs, and car seats this way. There’s no way we would buy these items new because of the high cost, but when you can get them in great condition for half of the cost or less (and sometimes even free) it makes it very doable.
Ask friends or family with kids for their advice: What was worth spending money on and what purchases would they have approached differently? It’s always wise to learn from others’ experience. The generosity of others is also likely to factor in. Humbly ‘accepting without expecting’ is a good policy when it comes to baby showers and the like.
3. Set A New Budget
As life looks drastically different so, too, will your budget. Have important conversations early and often. Address topics like health insurance, future work outlook, and daycare as soon as possible. Continue to revisit these conversations in perpetuity as needed.
Then, transpose the financial implications of these conversations into a working budget. Start with all the knowns. Keep a best guess placeholder for any unknowns and update it regularly as circumstances evolve. The goal is to maintain margin within an ever-changing scenario. Read this post to learn more about budgeting.
4. Plan For The Future
Parents have the joy of watching their kids grow and mature over time. Most will say that this seems to happen too quickly! This is all the more reason to invest early into savings vehicles like a 529 college savings plan so that it, too, can grow and mature over time. This is just one of many ways to take advantage of the time value of money and secure a strong foundation for your child’s future.
5. Protect Against Worst-Case Scenarios
Thinking about how life would change if a parent were to pass away or become ill is not pleasant. The birth of a child, however, makes it even more important to be prepared for all the what-ifs of life. Make sure you have enough term life-insurance to adequately cover both parents (even if only one will be earning an income). Long-term disability, if not offered through an employer, is also wise to have in place.
Lastly, now is an excellent time to create or revisit a will and other estate planning documents. It is important to have named a guardian for all children and determine what will happen to all assets should both parents pass away.
6. Continue To Communicate
We highlighted the importance of clear communication in our earlier post, 7 Musts for Money and Marriage. Communication is no less important after becoming a parent and it can be even more difficult. Parents have their hands full and are in demand around the clock. This means their attention and their energy are going toward caring for their child. But it is essential that couples not compromise time and communication with each other.
Keep in mind that the space to communicate and be together will typically no longer offer itself as freely anymore; it often must be intentionally set aside and protected. Prioritize time as a couple and communicate openly about everything, including finances.
Staying on top of financial goals often isn’t easy for couples that have just had (or will soon have) their world changed by the birth of a child. But you don’t have to do this alone. Whether you want someone to help manage your finances for you on an ongoing basis or just want a simple game plan that you can manage yourself, Guide Financial Planning can help. Schedule an introductory call to find out more.
About Guide Financial Planning
Guide Financial Planning is led by founder Ben Wacek, who is a Christian fee-only Certified Financial Planner™ and Certified Kingdom Advisor®. He has a passion to help people of all income levels make wise financial decisions and steward their resources from an eternal perspective using Biblical principles. Based in Minneapolis, MN, he works with clients both locally and virtually throughout the country and abroad. You can follow the links to learn more about Guide Financial Planning and our team and the services we offer.