Financial Changes When You Start Having Children

financial changes when a baby comesFinancial changes may not be the first thing on your mind when you welcome a new baby into your family. However, it really comes with it. There will be a lot of changes in your life as you add a member to the family and your finances will be one of them. Yes, as happy as you are while lulling the little one to sleep, there are things financial matters you have to think about at the back of your mind.

According to the CDC, there were almost 4 million babies who were born in 2015. This means that there are a lot of parents having to make adjustments on their budget year after year. Having a baby is exciting and life-changing and parents need to understand that as adults, they now have more responsibility on their hands.

Here are a few things you can look into to help you understand changes in your finances as soon as you welcome your little bundle of joy.

You have to make adjustments to your budget

One of the first financial changes you need to make when you have a new baby in the family is your budget. As you sit down and assess your income and expense, you would now have to make adjustments, especially on the expense side. There will be a lot of items which would increase and one of them is food.

It is always best to breastfeed babies because, for one, they get a lot of nutrients from their mother. Also, it saves you from buying expensive formula milk. However, not all mothers can do it so your next option is to buy formula milk. Those are quite expensive and can take up a good amount of funds in your food budget.

There will be big adjustments to your budget on almost all items. Your food will change, utilities could increase, and almost every other expense item will go up. As you anticipate this, you need to make sure that you are ready to make adjustments as you go. Find ways to increase your income or come up with an idea on how to lower your expenses. The bottomline is knowing that you will have to start making budget adjustments.

You need to increase your emergency fund

Financial changes will affect a lot of areas in your life and this includes your emergency fund. One thing you need to remember with your reserve fund is that it is meant to cover your expenses in case your income is affected. Now that you have a baby in the family, your expenses will increase which means that you have to add to your emergency fund as well.

One thing you can do is to slowly build it up so you do not put other funds in peril. You might be in a hurry to build up your reserves and miss a few credit card payments. This will only hurt your finances in the long run because of additional fees and other charges on the card. You are better off saving a few extra dollars a month rather than putting everything in all at once and getting deeper in debt.

An increase in income will be needed

Once the baby comes into your life, your finances will change and more often than not, you need to face an increase in your expenses. You need more food for the family, additional clothes, and even vitamins and medicine. If you are planning to go out on trips, it would now be a bit more expensive as you bring your little one to your adventures.

One effective way to get around this is to look for a way to increase your income. The Business News Daily shares that there are over 57 million Americans who are freelancing. This is one way to earn extra income as your family gets bigger. You get to do take on small jobs online on your free time every night or weekends.

Another thing you can tap into is your hobbies. If you have a knack for writing, the passion for baking, or even designing, try to make money out of it. You can offer your writing skills to businesses near you. Try baking a few batches of your cookies or cupcakes and sell them to family and friends. You can even sell them online without the need to put up a physical store. These may not bring as much but the idea is to supplement your income so you can pay for additional expenses in your budget.

Revisit your retirement fund

One of the financial changes you will have to go through when you have a new baby will be your retirement fund. First off, you need to resist the urge to dip into it when you have emergencies with the baby. It will take you a very long time to build it back up and with all the additional expenses you will have for the baby, you would have lost additional earnings on your fund.

In fact, you need to revisit your retirement fund contributions especially when there are big changes in your budget. Just because you have no need for it at present does not mean you will take it for granted. You might need it sooner than you think. The idea when you check up on your retirement fund is to make sure that you are on schedule with your savings and that you do not lower down contributions. Stay on track with your savings and it will benefit not only you but your kids along the way.

Think twice about big ticket items

Before the baby came, you might have been planning to buy a new car, put a downpayment on a bigger house, or even go on a big trip, you might have to put that on hold. Having a baby comes with it a lot of financial changes and that may be a part of them. Simply put, you might need the money for the baby and the other new expenses.

Rather than buying a bigger tv or a new game console, the needs of the baby comes first. It might be clothes, milk, or vitamins for your baby that takes the priority. Even before you put money down on a big item, you have to think about the needs of your little one first. There will be big changes in your budget and priorities will change. Financial priorities will change and the baby would most often always come first. It does not mean that you have to put everything off. You can save up for it over a stretch of time so your budget is not affected too much.

Having children will result in financial changes and it will always be a challenging situation to be in for parents. However, having an idea what these changes give you the chance to prepare for them. It can help you put your finances in order so when the small one comes, you get to focus on the needs of the baby and not much on your finances. Being able to prepare your finances is one less thing to worry about and more time for your baby.