Money Mistakes New Parents Make And What To Do About Them

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