If you normally put of budgeting as a boring task then things have to change when you have a baby. While having a baby is very exciting as a couple it may have a big impact on your household income and out goings. You might be a two income couple who struggle to save any money and wondering how your going to cope when you get to one income and an extra mouth to feed. The good news is that regardless of your income you can make some smart moves to make a baby more affordable and leaving you with fewer financial worries so you can focus on the important things like your new baby.
Calculate your current living costs: The initial step in budgeting is to list down all the expenses that make up your costs to live right now, without your baby. Ensure that all expense items are included. The monthly bills you pay regularly are often the easiest place to start: rent or mortgage, car, groceries, power, water, phone, cable, Internet, fuel, membership dues, etc. Once these amounts are written down, start listing expenses on other things. It does not matter how small the expense is: these little items add up. Sum up your total spending each month.
Establish your income: You will want to know your total household income. It should be easy to determine all the money going into your bank account. Deduct your expenses from income, and the remainder will be the baby budget. A baby may require about $800 a month or nearly $10,000 in the first year of life. Do you have enough money left over? It is also important to consider differences in income before and after birth. If you have a two-income household, there may be an income loss when the mother has to take time off for the baby. You’ll need to decide on the length of time for that period.
Cut unnecessary expenses: If the baby budget is not enough, look at items that can be eliminated, particularly non-essential spending. A lot of people spend nearly a third of monthly income just for dining out. Saving money on this item will go far.
* Pack a lunch. Cook at home instead of dining out. Make coffee every morning instead of getting it from the coffee shop.
* Fruitful areas for trimming are usually the Internet services, telephone and cable. Downgrade your cable package to a lower-cost package. Does it really matter much if it takes a few minutes longer to get connected online? There could be a $15-$30 difference in monthly fees. If you can reduce the features on these three services down to essential needs, you might save up to $100 a month; that’s $1,200 annually.
* Consider switching to low-gas-mileage cars (but make sure it is child-friendly). Driving a small and more efficient car can save money on fuel, loan repayments, servicing and even your insurance.
* Some baby things should be bought brand-new, such as baby’s crib and car seat. Baby clothes and maternity clothes do not need to be brand-new. People don’t need all the baby gear forever so there are loads of fantastic items in secondhand stores, garage sales and online auctions. Majority of maternity and baby items have been gently used for short periods of time (maybe 3-6 months) and quickly outgrown. There may even be unused items, because new moms often receive an overabundance of them as gifts.
* Be a smart shopper. Go for on-sale products instead of sticking to brand names and favorite products you automatically pick but don’t know exactly why. Many people shop for groceries once a week, buying more than 50 items each time. If you are able to substitute even half of your items for supermarket own brands or cheaper brands costing on average $1 less each then you could be saving $25 every week. This adds up to $1,300 after 52 weeks in a year. The point is for you to start paying attention to prices and key qualities in a product, and not just the brand. This will eventually make the habit of saving money second nature to you.
There are many spending habits you can change. You’ll just have to find out where and how much savings you can generate.
Set up baby’s monthly budget: In the first year of life, you’ll need between $600 and $800 each month for the new baby. You can raise this by saving money over time or revising your budget to make funds available for it every month. You will have to think of essential items the baby will need including expenses before birth (prenatal pills, doctors’ appointments) and after birth. There will also be expenses for delivery and after-birth care. Budgeting some money for health insurance will be desirable; if you do not have health insurance, you will have to plan how to cover these necessary payments.
Start saving money: It would be desirable to start saving money in a high interest savings account even before a child is conceived. You will need a lot of money during pregnancy and the first year of life, and will probably use up most of what you save ahead of that time. But you will find that saving money ahead is also a good way to build up savings for the baby’s future. Saving money unspent for the month in a separate high interest savings account gives you a pool of funds for emergencies, unexpected costs, and even for the child’s future.