family budget Archives - The Franklin Shopper

Couples expecting their first child often find that the months leading up to the birth of the baby are an exciting time filled with anticipation. But those months are also a time for expectant parents to make some important decisions regarding their finances.

Raising a child is an expensive endeavor, one that couples must start preparing for the moment they learn a baby is on the way, if not earlier. Expecting parents likely know their lives are about to change, and those changes must extend to their finances. The following are a few financial pointers for parents-to-be.

* Determine your necessary income. Many couples have hypothetical discussions regarding children and their finances, but until they receive the news that a baby is on the way, those conversations have a way of being put on the back burner. Now that a baby is on the way, couples need to revisit those discussions, and determining how much income they need is a great place to start. The dual-income household has become the norm in the 21st century, when the cost of living has skyrocketed. But couples must determine if it’s in the family’s best interest for both parents to keep working once their child is born. The cost of childcare is considerable, and it may be in a family’s best interest for just one parent to work until the child reaches school age. Consider your total income as well as your financial obligations (i.e., mortgage, car payments, etc.) and then shop around for the cost of childcare. If it makes more sense to become a single-income household, even if it’s just for a few years, then you will have another important decision to make.

* Determine who is staying home. Couples who have decided that it’s in their best interests to become a single-income household once their child is born must decide who will be staying home and who will continue working. It’s easy to say the parent who is earning the most should continue working, but that decision is not so black and white. Consider the cost of healthcare offered by each of your employers. Some healthcare plans are significantly more affordable than others, and this might weigh heavily on your decision, especially if both parents are earning relatively similar incomes. Another thing to consider is each of your opportunities for advancement at your current company and within your field. Earning potential should factor heavily into the decision as to which parent will continue working, especially if you plan to have another child down the road. The conversation as to who will continue working should be treated delicately.

* Discuss your housing needs. Couples who are expecting a child often feel this is a great time to abandon apartment living and buy a home of their own. But chances are you can comfortably manage to live in your apartment for a few more years after your child is born. Those extra years of apartment living can give you the chance to save more money so you can afford a nicer home in a better neighborhood that boasts better schools. Or apartment living for a few more years may give you more time to save and place a larger down payment on your home down the road. The larger the initial down payment, the lower your monthly mortgage payment, so it might be in your best interest to squirrel away a few more dollars before you go house hunting.

* Establish a financial safety net. Many financial advisors suggest both singles and couples have between three to six months’ income saved in case of emergency, such as a layoff or an accident that prevents you from working. This is especially important for expecting couples, who will soon have an additional mouth to feed. This safety net should be big enough so you can comfortably pay all of your bills, including those for housing, transportation and food, for three to six months. If saving that amount of money is not realistic, save as much as possible and continue to do so once your child is born.

* Purchase life insurance. Life insurance is perhaps the most important purchase expectant couples can make once they learn a baby is on the way. It’s understandable if young couples without children have no life insurance, but that child on the way will be relying on his or her parents for financial support for at least the next 18 years. Life insurance ensures you can provide that support even if something happens to both you and your spouse.

The months leading up to the birth of a child is an exciting time for the expecting parents, but it’s also a time to make some important financial decisions.

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The costs of raising a family can be considerable. In its 2014 “Expenditures on Children by Families” report, the United States Department of Agriculture estimated that parents in middle-income households with a child born in 2013 can expect to spend $245,000 raising a child up to age 18. While estimates regarding the cost of raising children in Canada are widely varied depending on the source of the approximations, it’s fair to assume that raising children in Canada can be costly as well.

Thanks to the costs of food, housing, childcare and education, many parents find themselves looking for ways to trim their everyday expenses and create more room in their budgets. Fortunately, such cost-cutting can be done without forcing parents to alter their lifestyles dramatically.

1. Consume less energy.

Reducing energy consumption does not mean parents and their children will spend their nights in darkened homes illuminated only by candlelight. Technology has made it easier than ever before to cut energy costs around the house. If you don’t already have one, install a programmable thermostat at home so you are not paying to heat or cool your home while no one is there. Though their price tag might be higher than traditional light bulbs, energy-efficient lightbulbs also can cut costs, as they consume considerably less energy without reducing light output and last far longer than traditional bulbs. Parents can also reduce the temperature on their water heaters. Manufacturers may set water heater temperatures as high as 140 F, and it requires considerable standby heat to keep waters at that temperature. Lowering your water heater temperature to 120 F won’t make showers any less enjoyable, but you might notice considerable energy savings over the course of the year.

2. Conduct an entertainment audit.

Home entertainment options have expanded considerably in the 21st century. Many families still pay for cable or satellite packages, but they’re now also paying for streaming subscriptions to services such as Netflix or Amazon Prime. Audit your entertainment consumption, determining whether your household relies more on cable/satellite service or streaming subscriptions. Consider reducing your cable/satellite package to the basic plan, if not cutting the cord entirely. If your family is less reliant on streaming subscriptions, cancel those subscriptions to save money. If you rely on both equally, consider cutting one for a month to see if you can live without it. With so many entertainment options available, chances are you won’t even notice the missing service.

3. Become a smarter food shopper.

Frequent trips to the grocery store waste gas, add unnecessary wear and tear on your vehicle and increase the chances you will make impulse purchases. Try to get all of your grocery shopping done in one weekly trip, using a list so you are less likely to make impulse purchases. Make the most of sales by buying sale items with longer shelf lives, such as cereals, in bulk.

Saving more money is a goal for many families. While saving more often means making sacrifices, those sacrifices do not always necessitate drastic lifestyle changes. FP165051

Tag: family budget

Financial Pointers for Expecting Parents

Couples expecting their first child often find that the months leading up to the birth of the baby are an exciting time filled with anticipation. But those months are also a time for expectant parents to make some important decisions regarding their finances.

3 Ways Families Can Reduce Everyday Expenses

Couples expecting their first child often find that the months leading up to the birth of the baby are an exciting time filled with anticipation. But those months are also a time for expectant parents to make some important decisions regarding their finances.

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