So you’re expecting? Congratulations! That bundle of joy on the way will make your life more rewarding … and expensive. But don’t worry. Here are five smart savings tips for new parents so you can break out the cigars without breaking the bank.
Make Those Gifts Matter
Now that you have a child on the way, everyone you know will want to give you baby gifts. You may have multiple showers thrown for you and may be getting a lot of the same things over and over: there are only so many toys a baby can chew on! Instead, pick a store to register for your baby shower and let loved ones know what you need upfront. If you’re still overwhelmed with onesies, rather than cramming them in your closet, try selling them online or, with a gift receipt, returning or exchanging them for something you really need. That way your friends and family get to “gift” you, and you get one more item to check off your list.
Be Diaper Savvy
For most new parents, three things will eat up their savings in the first few months: diapers, diapers and diapers. A baby goes through nearly a dozen diapers a day, and they’ll outgrow each size quickly. So be eagle-eyed for sales and coupons, and when you find a good price, stock up! You can also try reusable cloth diapers, but while they may save you money (if you wash them yourself), you may spend more time doing laundry.
Become A Baby Chef
Once a baby is ready for solid food, around six months in, their tastes can be hard to predict. Those jars of baby food can add up, and if your little one develops an aversion (or worse, an allergy), they’re suddenly as useful as sunglasses on a bat. Instead, dust off that blender and make your own baby meals. You’ll find dozens of recipes online that are affordable, healthy and delicious to little eaters. You can make as much or as little as your baby needs, change the recipe to suit their tastes and, best of all, you’ll know exactly what’s in it.
Do Daycare For Less
The cost of childcare is among the biggest early-on expenses parents incur. In some areas of the country, it can account for more than 30 percent of the total family budget, according to the Economic Policy Institute (EPI). Not surprisingly, data shows that families across the economic spectrum are struggling with these costs.
But by employing some expert-approved strategies, it’s possible to find safe, healthy environments for young ones—and save some money in the process.
1. Do A Nanny-Share With Another Family
This arrangement allows both families to pay a lower rate for childcare than they would hiring a nanny on their own, says Holly Flanders, consultant with Choice Parenting. It’s also mutually beneficial for nannies, since they can typically make 15–20 percent more with sharing gigs.
2. Consider An Au Pair
If you have an extra bedroom in your home, you could host an au pair from another country: In exchange for room and board and an affordable weekly stipend (starting around $200), au pairs can provide up to 45 hours a week of childcare for their host families.
3. Use A Flexible Spending Account
Check to see if your employer offers a Dependent Care Assistance Program (DCAP), which allows you to shield up to $5,000 of income from taxes to help pay for childcare, suggests Helen Blank, director of childcare and early learning at the National Women’s Law Center in Washington, D.C.
4. Take Advantage Of Tax Breaks
Regardless of income level, all families are eligible for a tax credit of at least 20 percent on childcare expenses of $3,000 for one child or $6,000 for two or more, Blank notes. In addition, about half of U.S. states offer a tax credit for childcare expenses, though these often have eligibility requirements based on income. Check with your accountant to learn more about your state’s participation.
5. Look Into Local Pre-K Programs
According to the EPI, many public school districts offer free prekindergarten programs at local elementary schools for kids 3–5 years old. These half- or full-day programs may be handled on a lottery basis if there aren’t enough spaces.
6. Stagger Your Work Hours With Your Partner
Consider whether one of you could work from 7 a.m. to 3 p.m. and the other from 9 a.m. to 6 p.m., suggests Flanders, to shorten the hours that your child needs care. You might also look into whether one of you could work a compressed workweek (full-time hours in fewer than five days).
7. Swap Childcare Favors With Friends
Watch a friend’s little one in exchange for your friend watching your child; or consider starting a babysitting co-op with other families.
Plan For The Future
Now that there’s a dependent in your life, your calculations will change: from how much disposable income you’ll have to how much you’ll need in the future. That’s why it’s important to budget carefully and prepare for the unexpected. If you haven’t thought about your life insurance in a while, now is a good time to reconsider it. Should something happen to you or your spouse, do you have the right coverage for your new family? How much coverage do you need, and what kind? You can get help with these and other life insurance policy questions here. As every parent soon learns, it’s never too early to plan ahead.
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Read more: It’s never too soon to start saving for the future. Read our 5 Tips for Starting Your Kid’s College Fund.
By Sam Song