By Ashley Andrews (Estimated reading time: 4 minutes)
Bringing a baby home is one of the most exciting events in a parent’s life. However, though having a new baby can be an incredibly joyous time, it can also be anxiety-inducing for new parents, especially when they realize how drastically their finances may change. What’s more, the costs of raising a child vary depending on where you live. For those living in Washington state, this might mean needing to spend an estimated $22,679 every year for each child. Because of this, it’s important to understand the basics of managing household finances. Here are some things to consider and practical tips to help families think about and manage their finances after welcoming a baby home.
Plan ahead meals and groceries
After a birth, caregivers may find themselves spending more time at home. Seemingly simple errands such as grocery shopping can thus become more challenging, both logistically and economically.
One way to save time and money at the supermarket is to plan meals for the coming week and create a grocery list for the upcoming shop. Using free apps like Paprika or OurGroceries can be useful for the household to digitally jot down the next week’s grocery needs based on the meal plan, recipes, and pantry needs. Taking a peek in the cupboards for what’s already in stock in the home and purchasing basics like grains, legumes, and canned fruits or vegetables can help to round out each meal and the grocery bill. One journalist documented her use of the concept of stockpiling to cut down on her grocery budget by 50%.
Making a comprehensive list of things needed at home, including toiletries and other non-food items, can help to reduce the mental load of what needs to be purchased. Ultimately, planning ahead meals and groceries might make it easier for families to contain their spending and stick to a pre-planned budget.
Trim utility expenses
Gas, water, and electricity usage will likely go up after bringing home a baby. To better manage this aspect of your household expenses, lowering utility usage can be one method. Families can reduce energy bills by keeping blinds and curtains open during winter to let sunlight in and naturally warm up the home. Another way to reduce energy consumption is by improving insulation within the home. Listen and look for drafts, checking for leaks around doors and windows. Turn appliances fully off in place of leaving them on standby and turn down the heat for sleeping hours. Increasing a home’s energy efficiency can significantly lower utility bills.
Prioritize paying off debts
Loans can help you get closer to your financial goals. But if you don’t have a proper payment plan in place, debt can bring you closer to financial insecurity. That’s why the New York Times bestseller The Total Money Makeover: Classic Edition suggests that you create a long-term yet practical debt pay-off method, so that you can pay off your car loans, mortgages, and more. By breaking bad money habits, you can pay off your debts while establishing a proper fund for emergencies and retirement.
The book recommends that you pay off your debt using one strategy called the snowball method. In this case, you’ll pay the smallest debts first, so that you can have realistic and quick wins from your debt payoff plan. You can also opt for the avalanche method, in which you pay off the largest debt to save costs from high-interest rates.
Use a budgeting app
Using a budgeting app is an effective way to track spending and manage finances. With a new baby, there will be multiple new expenses such as diapers and formula. Monitoring expenses can help to see what’s coming in and going out.
Budgeting apps such as Mint and You Need a Budget (YNAB) among others can help families stay on top of spending and finances. With free trial periods, new customers can test out which apps might work best for their families.
Many budgeting apps sync with bank accounts to easily access and view how much money is in each account at any given time. In addition, these apps have budgeting features to help create a comprehensive financial plan that factors in new expenses such as childcare, education tuition savings plans, or a life insurance policy.
Hopefully, the tips we’ve listed above have given you a solid idea of how you can better manage your household finances after welcoming a baby into your home. Do you have other savings tips that have worked for your family? Let us know in the comments! For more parenting insights, check out our other posts here on Highs and Lows.