12 Tips To Help New Parents Avoid Money Mistakes

“Don’t raise kids to have more than you had. Raise them to be more than you were.” Anonymous

Having a newborn baby is a time to rejoice. However, the reality of raising a child can be daunting. As parents, we underestimate the costs. Even those with the best money habits may get carried away by a new family member.

12 Tips To Dodge Potential Financial Mistakes

1. Be Financially Ready With An Emergency Fund

Every household should have an emergency fund with six months of savings set aside for unforeseen events. It is no different when we are expanding our family, and Arguably, we need this money cushion even more so.

2. Don’t Overspend For Your Newborn’s Needs

Plan out what is essential to get initially, borrow from family or friends for some items and consider thrift shops.

3. Avoid Lifestyle Inflation Remember, young kids will size out of these things fairly quickly. Avoid throwing lavish birthday parties even though you want to celebrate each year. Their friends will have fun no matter where you have the party.

4. Saving Early For College Set up a 529 savings account as soon as you have a social security number for your child. Start saving early for college to benefit from tax advantages and compounding growth.

5. Keep Up Your Retirement Savings While saving for your child’s tuition is essential, do not sacrifice your retirement savings. It is better to reduce your spending on unnecessary items to save more than face withdrawal of your retirement funds or borrowing against it.

6. How To Talk To Your Children About Money We should be good role models in helping them learn how to save money. Teach them to know the difference between wants versus needs. Don’t give in to impulsive purchases when they get upset. Instead, delay gratification on purchases. Set a good example of investing now for future growth.

7. Your Employee Benefits Need A Fresh Look Once you have a child, it is an excellent time to take a fresh look at your employee benefits package. What may not have jumped out when you first started working there may be more important for your growing family now.

8. Flexible Spending Account (FSA) If you have a health plan through your job, you can use a flexible spending account to pay for co-payments, deductibles, some prescription and non-prescription drugs, and other out-of-pocket health care costs. The FSA is a savings account with tax advantages.

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