Money Mistakes New Parents Make And What To Do About Them
There’s a lot to learn when you’re new to the parenting game and one aspect that’s often
overlooked is the adjustment that must be made to your family budget when that little
bundle of joy comes along. Remember, as rookie parents you need to pay attention to
your finances like never before because even the smallest misstep can compound and cost
you in the long run.
Ignoring A Drop In Income
First and foremost, you need to be practical which is hard when you’ve just brought that
new baby home and want make sure they have everything. Still, there’s bound to be a
drop in income even temporarily and you just can’t afford to ignore that hard fact. There
will almost certainly be a cash-flow pinch because maternity leave doesn’t often cover
100% of your previous income. While many new parents have a ‘spend now and pay
later’ mentality, it’s important to stay frugal so you’ll be used to penny pinching later on.
Take a look at your existing budget to see where you can cut down on things you enjoyed
before baby came along like movies and perhaps even charitable donations.
Over Fitting the Nursery
Overzealousness can be a big issue when it comes to new parents trying to find their
financial footing. Often parents wind up with a nursery full of the things that want and
that list doesn’t necessarily coincide with the items they need. Here you need to be a little
discerning and make sure you can distinguish between the wish and need categories.
That’s not to say you can’t splurge on one or two big ticket items, but most of the items
that will fill that special room can be bought on the cheap, or better yet, even borrowed.
Ignoring the pratfalls of credit
Credit cards in particular can be very enticing for new parents that don’t want to wait for
what they consider to be the essentials like a new running stroller, but they should really
understand the deal they are making with the credit card companies before they satisfy
their immediate desires with plastic.
Cycle of Debt
There’s a shocking number of Americans (up to 48% according to some research) that
only pay the minimum amount on their credit card balances. By using their credit cards
irresponsibly, these people can get trapped in a never-ending cycle of debt where it
takes years to pay off what you owe. Remember, carrying a balance on these cards is
in effect mortgaging part of the control of your family’s financial future to the credit
card companies. The solution isn’t to do away with the cards altogether, but have a plan
to bring the balance down by making more than just the minimum payments over a
reasonable amount of time.
Overall, new parents that want to be financially responsible should adopt a budgeting
process and be frugal money managers.
For more interesting articles like this, visit All My Children Daycare.
Author: Rob Starr