Starting a family? Keep your budget on track with these 4 important tips

Becoming a parent is one of the most life-changing things a person can go through. And let’s face it, having a child is expensive — especially given the cost of living these days.

As you embark on this exciting journey, it’s important to be prepared for all the financial challenges parenthood presents. Luckily, there are ways to make budgeting your finances as an expectant parent less daunting than it might seem.

For an expert opinion, we spoke to Tanya Copeland, Certified Financial Planner (CFP) and Chartered Life Underwriter (CLU) with Coast Capital, about the best ways to plan for your family’s future.

Start by reviewing your current expenses

Coast Capital

With financial planning, the hardest thing can often be knowing where to start. Copeland suggests you start by reviewing your current budget; consider the essential things you need, like groceries and rent, then take a look at where the remainder of your money is going. 

Remember that all budgets are personal — something that you might consider necessary might seem like an extra to others, so take the time to really look at it.

Once you’ve established a baseline, you can review your take-home income and start creating a realistic monthly budget.

“If your budget is too strict or has unreasonable expectations, chances are you are not going to stick to it, which is the most important thing,” says Copeland. “It’s not a race to see how little you can spend and how much you can save. You can’t save only for tomorrow and not have fun today. You need to find the right balance of spending today to enjoy your life while also saving for the future, or whatever goals you may have.”

Put money aside with an automatic savings plans

Coast Capital

Similarly, Copeland says that when it comes to maintaining and growing savings, new parents often find the hardest part is taking that first step to start. Unexpected expenses tend to pop up here and there, and we procrastinate on actually putting money aside.

People may think they need to put large amounts of money aside, but something is better than nothing. Copeland’s advice is to start with a small, affordable amount from each paycheque. For example, even saving $50 bi-weekly can add up fast, amounting to $1,300 a year. By doing this, you’ll quickly have a nice emergency fund to rely on if the need arises.

“Once a savings plan is started, parents will often increase that amount in the future when they see that they really aren’t missing that amount. I always suggest using automatic savings plans that happen electronically. That way you don’t have to think about it.”

As your circumstances change with income and expenses over time, so will your budget, and you can reassess if there is room to increase your automatic savings.

Be prepared for changing monthly costs

Coast Capital

At first, the biggest monthly costs that come with parenthood are the obvious ones: diapers, formula, clothes, childcare, and so on. But there are also costs that many may not consider, like additional life insurance to financially protect your family, or even the added expense of socializing with new parents.

Then, after the initial main expenses like childcare are through, you can expect to budget for things like after-school care, extracurricular activities like dance classes or music lessons, or tablets and computers for your child as they advance through school.

“To prepare for those expenses, again, know what are the important expenses that must be paid for, the necessities, and what are the extras,” Copeland says. “Try to plan to always be saving, whatever the amount. You can use those savings to cover those extras you want for your child, or you can redirect those savings into the monthly costs that need to go towards monthly dance costs or the equivalent.”

Copeland also recommends talking to other parents about their experiences with extracurricular costs, as this can give you an idea of what to expect in future. 

Speak with a financial advisor at Coast Capital

Coast Capital

Meeting with a trusted financial advisor is an incredible way to figure out how to manage your finances. You’ll get one-on-one advice from an expert and gain a better understanding of your financial situation so you can have the most control over your money. At Coast Capital, helping new parents all starts with a Money Chat.

“There are no difficult questions, and it helps open the conversation about current money habits, savings habits, protection for your family and investments,”  Copeland says. “The parents are the ones that drive that conversation, what are their most pressing concerns at this time, what are things they are worried about for the future, what options are available.”

In addition to the Money Chat, Coast Capital also offers a range of tools that assist with budgeting, like its Money Manager, its budget calculator, and its RESP calculator.

For more information about Coast Capital Saving’s Money Chat with a financial advisor, or to book one today, click here.