Financial Reminders for New Parents

New parents have a lot going on between the sleepless nights, dirty diapers and piles of laundry. This isn’t all that new parents must consider either, as financial considerations necessarily change as soon as a new child is brought home. 


Bringing Home Baby

Many new parents begin paying for their children even before they bring baby home. In addition to buying things for the nursery and lots of baby gear, parents have probably also begun paying for the medical care the mother receives during pregnancy. Even those with insurance have a deductible to hit! Depending on the insurance plan and the care a pregnant woman receives, new parents may pay anywhere from just a few hundred dollars to a couple thousand for an uncomplicated pregnancy and birth. Those who adopt also face considerable costs as they apply to an adoption agency, get a home study and pay legal or attorney fees that are often prohibitive. 


Create a Budget

Some people think the word “budget” is a bad word. In truth, a budget is not a list of rules limiting your fun but is a simple plan for how you will spend your money. When new parents sit down and lay out all of their income and expenses, they will identify areas of flexibility they may be able to control as they work to fit a new baby into their financial plan. Budgets are for both those with limited income and those who are financially stable. Some websites even have simple budget worksheets to help you develop one. 


Plan for the Future

New parents also have to think about how expenses will fluctuate in the years to come. Those who can afford it are encouraged to begin saving for college. Savings accounts can work, but investing in a 529 plan seems to be the best bet as you will see a return on your investment that a simple savings account won’t be able to offer. Almost everyone, no matter how small the income, should also take out a life insurance policy on a new child. Life insurance on children is incredibly affordable and can ease the financial burden should a tragedy occur later on. 


Use Your Resources

Single parents may face additional challenges as they grow their families. It is important that anyone offering finance tips for single moms consider how a single parent dynamic can affect a family’s ability to save, plan for emergencies and pay for quality childcare and extracurricular activities. Often, the state offers resources that can help offset some of these costs for those at or near the poverty level, and there are many agencies or organizations that offer additional aid. 

The most important thing new parents should remember is to stay in control of their financial situation as much as possible. Children bring new expenses, but many of these expenses can be planned for, and there are lots of ways to save as well. Shopping consignment sales or thrift stores is a good start, and many brands offer loyalty savings and coupons to offset expenses. Buying in bulk provides its own savings as well. Whatever the added cost children bring, they add joy and love to our families, and that is priceless. 

When Should You Start Teaching Your Child about Money?

One of the most common questions that parents have is this: When do I start teaching my child about money?

Money is such an abstract concept that many children have trouble grasping the idea behind it. And, with money increasingly invisible, and transactions carried out digitally, it’s even harder for kids to understand what money is all about.

However, in order for your child to thrive, he or she needs to know how to properly manage money. Luckily, you can start teaching your children about money at a young age.

Laying the Groundwork

Most children aren’t going to “get” the idea of money until they are at least toddlers. And even then the idea of money is going to be a little difficult for your children to understand when they are two. But that doesn’t mean that you can’t begin laying the groundwork for money lessons.

One of the best ways to begin laying the groundwork is through visual representations. When my son was between two and three, we began allowing him to “earn” TV time. He received coupons, each amounting to TV time, for good behavior, using the toilet, and other desirable actions. We labeled each of his videos with numbers, reflecting how many coupons each required. My son got used to counting up his coupons, and working toward watching his favorite show.

Later, when the allowance began, he made the connection between his TV coupons and money. Now, as a 10-year-old, my son understands saving up (he recently purchased a Nintendo DS), and he created a budget for March reflecting his expected allowance, as well as extra money he planned to earn by helping with certain home business filing and shredding tasks, and the books he wanted to buy.

Deciding When to Begin

The key is identifying when your child is ready to begin learning about money. Every child is different. However, you can gauge readiness by the questions your child asks. When he or she begins wondering about how to get more toys, that’s a good place to start.

You can use visuals at first. Cash, even though you might not use it, is a good idea. Many parents like using envelopes or jars (we use jars). Charts identifying savings goals are helpful so that children can track their progress. It can also help to open a kids savings account at the local bank. No, the interest won’t be as good, but many local banks and credit unions give prizes to the kids when they reach certain levels in their accounts, and this can be a great motivator to teach them to enjoy saving.

Finally, make sure that you have financial discussions in your home. My husband and I talk about our financial plans in front of our son, and debate the merits of different uses of our money. We also make it a point to help our son comparison shop by looking at online prices as well as in-store prices (something for those who are a little older).

If your child hears your positive discussions about money, from paying down debt to saving for retirement to giving to charitable causes, he or she will be more interested at a younger age. Include your child, and this will be one of the greatest teaching tools available to you.

When do you think you should teach children about money?