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A survey by Aviva found that soon-to-be parents spend an average of £1,645 preparing for the arrival of their first child, according to Yahoo Finance.
Expecting a baby is a joyous occasion, but it can be daunting when you start listing all the items they need. You will notice additional expenses that could hurt your finances if you are not cautious.
With your budget set to change drastically, it is essential to start budgeting months ahead. Here are quick tips to create a family budget that will help you purchase baby essentials while keeping your savings intact.
Prepare for Unemployment During Maternity Leave
Whether you are entitled to paid maternity or parental leave, plan your finances ahead of time. Start by evaluating your financial status and calculate how much you can save every month until when the baby is born.
To get an accurate figure, add all your essential expenses such as mortgage payments, insurance, tax, toiletries and groceries, and utility bills. Then subtract the amount from your total monthly income.
Alternatively, practice living off one source of income if both you and your partner are employed. Assume that your salary doesn’t exist and revise your budget based on one income. This way, you will have enough savings for daily expenses while on maternity leave.
Find New Ways to Reduce Expenses
When budgeting for a baby, look for practical ways you can reduce expenses. For example, trim your spending on daily morning coffees, weekly lunch outs, unused gym membership, and TV subscriptions.
You can even cut back on a baby shower. But that doesn’t mean you shouldn’t host one. Consider hosting a virtual baby shower to share your happiness without breaking the bank. Once you’ve eliminated unnecessary expenses, save the money for regular expenses like diapers, clothing, and toys.
Create a Budget and Start Saving
Keep in mind the arrival of a baby changes your budget in many ways. Create a financial plan with childcare, insurance, lifestyle changes, and healthcare costs in mind and open a family savings account.
Also, seek cheap alternatives to purchase large items like a car seat, stroller, crib, and changing table before the baby arrives. For instance, you may borrow from close family and friends with kids who have outgrown their crib or stroller or buy second-hand items.
As a parent, you may get lost in the joy of having a newborn and splurge on the latest baby stuff. But before you can start shopping, take some time to create a budget for your baby. This step prevents you from making poor decisions that result in financial implications.