4 Important Points to Consider While Budgeting as a New Mother in the Post-Covid World
It is an understatement to suggest that life changes dramatically with the birth of a child. The increase in happiness coincides with an increase in expenses! Managing your budget in the post-Covid world can be stressful and it’s good to be armed with some tools to calm your mind.
Amid the pandemic, becoming a new parent can be difficult. The threat of losing your job or seeing your pay cut exacerbates the problem. Any new parent understands the importance of exercising extreme caution when it comes to their spending, saving, and investment habits. If you’re a new parent or about to become one, you may want to revisit your financial plan (if you had one) and if peace and calm is what you’re after then I can highly recommend making your own soothing candles with candle-making fragrance to soak in if you ever get a spare five minutes alone!
Know Your Financial Priorities
It is wonderful that new parents are keen to save for their children’s education. This should not, however, be done at the price of your current and future financial stability. After all, while it is possible to borrow money for college, it is not possible to borrow money for retirement.
Once you’ve saved up a small sum of money to meet unexpected costs, your financial priorities should be as follows:
- Retirement savings: To make sure you’re saving enough for the future, use a retirement calculator. You should set aside 15% of your salary as a minimum.
- Debt payments: Any debt that is causing you trouble should be paid off. For example, payday loans, title loans, and credit cards cost you money every day and prevent you from focusing on more critical financial concerns.
- Contributions to an emergency fund: From that £500 start-up, build your emergency fund to have enough money to last several months.
Once you’ve done these activities, you can start thinking about college savings strategies.
If your family is keen to contribute to a junior’s university education and you can spare £15 to £25 each month, go ahead and do so. You can put down the basic minimum for the time being, and generous family members can also contribute.
Practice Living on Less
Your income may alter after having a child, even if just temporarily. One parent may choose to take unpaid maternity or paternity leave, or both parents may choose to leave their careers.
Get acclimated to living on a lower salary in the months leading up to your due date. Set aside the soon-to-be stay-at-home parent’s pay to help them adjust to a lesser budget and save for child care and other impending expenses.
Be Prepared for Fluctuating Expenses
The costs of formula, childcare, and nappies will not be sustained indefinitely. Those payments will dwindle away as your child grows, and other expenses such as dance instruction and vehicle insurance will ultimately take their place.
- You may estimate how much you’ll spend in the first year using a baby cost calculator. If you intend to put your infant in daycare, fine-tune this amount by obtaining quotations from nearby nurseries and pre-schools.
- Compare the costs of adding a kid to the health insurance policies of all working parents.
- Purchase used or nearly new items.
- At your baby shower, make a list of essentials.
- Consider how long these expenses will last. The crib and strollers, for example, are one-time expenses for first-time parents. Others, like child care, last only a few years until your child starts school.
- Review your upcoming expenses when you sit down to pay your payments each month. Make as much room in your budget as possible ahead of time to avoid being taken off guard.
Prepare for the Times When There Simply Isn’t Enough Money
There are instances when money is simply insufficient. The two main tactics for balancing your new budget are cutting costs and boosting household income, but both are easier said than done. Take a hard look at the following possibilities if you haven’t already:
- Look for new ways to earn money.
- Request a raise or look for a better-paying job.
- Downgrade or sell your vehicle.
- Consider refinancing your mortgage and/or your student loans.
- Consolidate and compare your home and auto plans.
- Remove any unused monthly subscriptions like streaming services or gym memberships.
*This is a collaborative post.