Money management for new parents
For many new parents, money management can take a backseat to caring for your child. Micromanaging your finances may be the furthest thing from your mind, but a new family member can bring about big changes to your financial picture. According to the U.S. Department of Agriculture, adding a child increases your expenses by about $1,100 per month, on average. That’s a lot of money to account for, even if you’ve got a good handle on your monthly budget.
The following steps can help make family money management easier, leaving you more time to devote to your new family member. (If your new arrival isn’t here yet, we put together some tips to help you prepare.)
Create a budget
Many people talk about creating a monthly budget, but few actually do it. If you haven’t done it yet, a growing family is a good reason to start budgeting. You have new expenses, and you probably need to manage your money more carefully. For example, one cost that’s likely to increase as your child grows is your grocery bill. You can manage some of that increase by clipping coupons, using bonus cards, buying certain items in bulk and using a rewards card that may give you cash back when you spend. You can also sign up for discounted online delivery subscriptions for regular purchases such as diapers.
Define your spending goals, set caps on nonessential items and look for areas where you can cut back. You may find that with a new addition at home, there’ll be less time, and less room in the budget, for some of your previous leisure activities such as going out to eat.
Seek out advice and support
For many new parents, having a family member or friend who knows the challenges—both monetary and otherwise—of adjusting to a new family member is invaluable. But that’s not the only option.
Many employers offer leave when you have a new addition to the family, as well as other benefits that can include on-site child care, support groups or even financial assistance.
Additionally, there are likely many people where you live making the same adjustment. They may have money-saving tips and other helpful tidbits to share. Online blogs and social groups can offer opportunities to share information or meet up in person to discuss issues and solutions to the financial, emotional and professional challenges of a growing family.
Money management time-savers
As a new parent, your time is precious. When it comes to your finances, there are a number of features your bank may offer that can save you time managing your money. For example:
- Get mobile banking: Banking via your cell phone or tablet offers convenient access to account balances as well as the ability to pay bills when you’re not at your computer. Also, many banks offer the ability to deposit checks using your device’s camera.
- Set up email or text alerts: Your bank may allow you to set up alerts to remind you when bills are due or notify you of suspicious activity. Enabling these notifications can help you stay on top of your finances, offering some peace of mind when life gets hectic.
- Automate your bill payments: Setting up automatic bill payment can save you time, help you avoid late fees and keep you from missing due dates.
- Schedule your savings: Whether you want to automate transfers or deposits into your savings, retirement or education accounts, this feature can help you stay on track to meet your long-term financial goals without having to think about it.
Bank of America offers a variety of mobile banking services for its customers that can help you manage the financial adjustments that come from adding a new baby to your household.
Consider consolidating different accounts
Carrying a balance on multiple credit card accounts may be costing you extra money and time. Consolidating multiple accounts onto one card could potentially save you money if you move higher interest rate balances to a single card with a lower interest rate. Having just one bill to pay each month can also free up time to spend with your new addition to the family.
You may also want to consolidate bank accounts. When your checking and savings accounts are all available on one site, it may help you to get a better understanding of your day-to-day finances and to manage your money more easily. Joint accounts between partners can also help since everyone knows which bills have been paid and which haven’t—but there are lots of factors to consider when making that decision.
Saving for children’s educations
College may seem far away, but it’s never too soon to start preparing for the cost of tuition. The earlier you start investing for college, the better off you will be financially. Plus, trying to catch up on college savings later on may be more difficult. You can learn more about college savings plans at Merrill Edge.
In addition to college, you’ll likely want to think about your child’s education and care in the short term, as well. Take a close look at what your day care or education costs might be over the next few years. You may want to consider if you or your spouse wants to stay home to help offset child care costs. Or you may want to boost your savings to prepare.
Having a new baby is a life-changing experience. Along with the diaper changes and 3 a.m. feedings, though, come some changes to your financial picture. However, with some planning and a few adjustments, you can feel more in control of your money. You may not be able to avoid sleepless nights right now, but, hopefully, worrying about your finances won’t be one of the things keeping you up.