It will cost you an estimated $233,610 to raise a child. This is what a report issued by the Department of Agriculture had to say about a middle-income couple raising a child in the U.S. And no, that doesn’t include college.
With child-related expenses always on the rise, it’s wise to be financially prepared for parenthood. Nicole Merritt from jthreeNMe, herself a mom of three, shares with us some budgeting and saving tips for life with kids.
Daniela: Good morning, Nicole, and welcome to Dreaming of Baby. We’re looking forward to our discussion on the financial aspects of parenthood and are excited to be receiving some first-hand tips from you. Before we delve in, can you please introduce yourself to our readers?
Nicole Merritt: Sure, and thank you for the opportunity to be a part of this. My name is Nicole Merritt and I am a parent to 3 wonderful children. I am also the Owner/Founder of jthreeNMe, which provides a real-life peek at parenting, marriage, and self-improvement. jthreeNMe is an online community that I like to describe as chicken soup for those that are over-stressed, exhausted and under-inebriated, but still utterly happy and longing to improve. My content has been featured by marriage.com, Everyday Family, SheKnows and Scary Mommy. Thanks again for the opportunity to be a part of this discussion!
Daniela: Thank you for that overview! To start off our discussion, if a friend tells you they’re expecting, what would be the first financial tip you provide? (after the ‘congratulations’, of course!)
The Importance of Saving and How To Save
Nicole Merritt: Like you said, it would be important to congratulate them first! But, with regard to the first financial tip, I would say to start immediately saving for your child’s education and future – be it in your in-home piggy bank (definitely don’t suggest that though), a growth savings account you have with your bank, via opening a 529 plan for them or by way of a college prepaid program like we have here in Florida, if their state offers such or something similar.
Daniela: With the aim of helping our readers with this, how can parents-to-be gear up for such savings?
Nicole Merritt: Well, that is not always easy. I totally understand for some that saving is at times, well, at times that’s not even an option. Many people live paycheck to paycheck. I would offer these suggestions: Have a monthly budget that works for you; be realistic but cut out spending where you can. And, you absolutely have to stick to this budget when possible. Inside of that budget, be it $.50 or be it $10, allocate what you can every single month to savings specifically for your kid(s). Some other tips: Steer clear of using credit when you can and be sure to have a life insurance policy on yourself so that your children will be taken care of if/when such is needed.
Nicole Merritt: “Have a monthly budget that works for you; be realistic but cut out spending where you can.”
Tips for Family Budgeting
Daniela: Thanks for that; whilst being aware that each family’s income and expenditure are unique, are there any general tips you would like to share with regards to family budgeting – and maybe also based on the experience of life with three little ones?
Nicole Merritt: Well, in all honesty, I stink at sticking to my daily and monthly budget, but I have been very good about making sure that I contribute to my children’s savings each month. Knowing that, I give myself slightly more leniency with my weekly budget than I probably and admittedly should. So, for my general tips with regard to family budgeting, I would say again to not use very much credit (use debit or cash). I would also say to allow one or two activities per child per week (or whatever you can afford, split between them). Another suggestion is to cut your grocery bill where you can. My family and I spend far too much on food and we waste a lot – that is something I am working on. Also, eat out less and cut coupons/search for local deals. Another thing you must do is be careful with online shopping – it can rope you in and once it has its hold, it is awfully hard to break free from that. Sometimes as parents we also struggle with buying our children toys everywhere we go, for every little thing, or even to simply get them to stop fussing. We need to stop doing this, but if you are someone that really struggles with buying your child things everywhere you go, then go to the dollar store and stock up and use those items for such.
Limiting Online Purchases
Daniela: Well, it’s great to be honest and tips based on experience help out more; so thank you for that. Prior to our interview, you also referred to online purchases and easiness with which to make purchases (also guilty as charged here); any tips on how to steer away?
Nicole Merritt: Hmm…throw your computer in the ocean and delete the Amazon app from your phone? Okay, you probably won’t do either of those, so I would say… maybe delink your credit card from any online accounts so that if you go to make another purchase, you have to re-enter it which will allow more time for you to pause and think about if you really need the item.
Nicole Merritt: “Delink your credit card from any online accounts so that if you go to make another purchase, you have to re-enter it which will allow more time for you to pause and think about if you really need the item.”
Daniela: With regards to groceries, any hints as to how the grocery bill can be cut? What do you think should be addressed first in this regard?
Nicole Merritt: Meal planning! I don’t do it, but I should and I need to! I have so many friends that do that and they amaze me with how much less you can spend at the grocery store when you plan a weekly menu and buy only the items you need. The coupon cutting and deal-finding can seem super daunting, but there are so many apps and Facebook groups and websites out there that can help you with such or even find the deals for you. It just requires you actively checking those out before aimlessly buying your groceries.
Nicole Merritt: “[It’s amazing] how much less you can spend at the grocery store when you plan a weekly menu and buy only the items you need.”
Daniela: So planning ahead is key? To what other aspects of family life and expenses do you think planning also helps save money?
Nicole Merritt: Yep, planning is so important when it comes to parenthood in general and finances in relation to parenting. You must plan ahead for your pregnancy and delivery related medical fees. You must plan ahead for your family’s health insurance coverage. You must plan ahead for if/when you are no longer around and get a life insurance plan. You must plan for your child’s education and future. You must plan for your vacations and holiday expenses in advance. You must also plan for your retirement and for when you will be an empty-nester.
Setting Safety-Nets for the Future
Daniela: That’s good to be aware of; can you maybe elaborate a little bit further on the need for life insurance policy as well as planning for retirement and being an empty nester? Young parents-to-be might not think this long-term when planning for a baby; they’re more likely to focus on the child itself, rather than their own personal financial future, so any insight would help.
Nicole Merritt: Sure. With regard to having a life insurance policy on yourself and/or eventually on your children here is what I say: nobody likes to think about anything bad ever happening, but we need to because it is important. With both you and your spouse having life insurance policies in place, your family will be financially supported if anything were to ever happen to one or both of you. It is also a smart idea to open life insurance policies on your children when they are young because as far as I understand it, when they are children, they will automatically qualify for a policy – and once they are qualified, there is no need to requalify. Again, that is my understanding. And a policy on them is only to secure financial safety for your children’s children. Additionally, depending upon the type of policy you open, some policies offer an associated cash value which could be used if ever needed. I would suggest consulting with your insurance agent or an estate planner regarding such and to figure out the most cost-effective way for your family to get something in place. With regard to retirement, you definitely have to be thinking about that now as well, but yet again that will require an adjustment to your monthly budget to ensure that X amount of money is being put towards such each month.
Daniela: Thank you for that Nicole, as we said earlier then, planning is important in terms of financial security. On a final note, is there anything else you wish to impart to our readers with regards to being money-wise and which we might have missed in our conversation?
Nicole Merritt: I think I really have covered it all. As you can tell from how I introduced myself, I am a business owner, a writer, and a mom – I am not a financial whiz or genius. But, thankfully, I was raised by one. Additionally, I have had the pleasure of consulting with some great minds in the financial world and that gives me comfort in sharing the suggestions that I have here; knowing that they are good ones, as they are the ones that have either been shared with me or that I have gathered via my own real-life experiences.
Nicole Merritt: My final suggestion is to hire or consult a financial planner or advisor and let them help you make the best financial decisions for your family. I like the quote by Will Rogers that states, “The goal isn’t more money. The goal is living life on YOUR terms.” I hope this article and my answers help your readers do just that.
Daniela: Thank you; and that’s indeed a beautiful quote! I wish to thank you for your time today, Nicole, you’ve given some great tips to our readers!
Nicole Merritt: Thank you so very much!