Becoming a new parent is a wonderful life experience, but it also comes with a ton of work, sleepless nights and some financial stress.
Today the guys talk to Kim Palmer, mother of two and author of Smart Mom, Rich Mom about how to build wealth while raising a family and preparing financially for parenthood.
There are many new expenses that come along with a new family member. According to Kim, on average a new child will cost $11,000 in their first year which doesn’t even include childcare but we’ll get to that. It just goes up after that costing you about $250,000 by the time they are 18 years old.
Besides the basics like diapers and baby food which can cost upwards of $75 per week, you’ll want your new bundle of joy to have the best and most safe baby gear. Some of those big-ticket items like cribs and strollers and cost hundreds.
You can buy gently used clothing, but car seats and crib are being recalled all the time so avoid buying those second hand.
Most families have to make the decision whether or not to pay for childcare. Cutting one parents salary out of the equation and it’s a tough call. With all these new expenses the thought of removing a salary even for a few months can be a scary thought.
On the other hand, childcare costs are pretty high. Depending on where you live, it can cost $2,000 a month for daycare and $4,000 a month for a nanny. Child care will likely be more than your mortgage payment.
Kim loves using Amazon Family which lets Prime members save 20% on diapers subscriptions plus additional family-centric discounts and recommendations. She buys a lot online so she can compare prices and maximize her family savings.
Start saving sooner than later. She and her husband saved for fives years before having their first child. It will get much harder after you have children. As a parent, you also need to start to think about saving for college tuition or buying a larger home for your growing family.
Unfortunately, most women do not get paid maternity leave. If you are planning a family in the future, this is critical to take into consideration when looking for a job. Unless you are planning on giving birth at your desk, then you will need some time off before and after the baby is born.
If you want to know more about the company culture and policies of a potential employer, check out Fairy God Boss. They offer a platform for women to get the scoop about companies, and their policies from other women.
Before asking about taking your time off, talk to other co-workers about their experiences with maternity leave. See how they navigated it and came up with a plan – how long will you need (providing exact dates) and who will be taking over what duties in your absence. This will give your boss a clear picture of what the next few months will look like without you.
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Saving for your children future and education should start as soon as possible but not before you pay yourself. Contributing to your retirement is a priority then you can begin saving for your children’s’ future.
College costs are rising and if you want to help your kids pay for college, opening a 529 savings plan is the way to go. You can set up automated monthly payments so you can make steady progress over eighteen years. Prefer someone else to do it for you – ask CollegeBacker.
How much should you be saving? Kim says Fidelity suggests $5,000 per child per year if you can swing it.
Eventually, your kids will leave the nest, and you want them to go with as much financial knowledge as possible. Talk to your kids about sacrificing now for future goals.
When they ask questions, try to give an answer that will introduce them to new concepts. Include them in family finances like paying bill or budgeting so that can understand
Parenting can get very overwhelming. When you are juggling work, kids, cooking, and cleaning, so the key is to be efficient with your time. This way you can spend more time with your children enjoying life. Kim says as much as you can. From pay bills to ordering snacks, run your family like a well-oiled machine.