A new baby means new expenses and it’s all too easy to feel overwhelmed in the run-up to the little one’s arrival. Employing money-saving strategies helps control your spending, saving you substantial hard earned cash on a daily basis.
Jennifer McDermott from finder.com shares with us some helpful budgeting and money-saving tips to see you through the newborn daze and beyond.
Daniela: We have with us today Jennifer McDermott, Consumer Advocate for the personal finance comparison website, finder.com with whom we shall be discussing the financial side to parenthood. We’re excited to discuss money-saving strategies for new parents; before we delve into this topic though, grateful if you could introduce yourself to our readers.
Jennifer McDermott: Hello, my name is Jennifer McDermott and I’m a Consumer Advocate with personal finance comparison website, finder.com. We help people make better decisions with their money whether that is comparing credit cards, selecting a personal loan or preparing for parenthood.
Daniela: Great, we’ll be focusing on preparing for parenthood today and helping parents-to-be use their money wisely. What should parents-to-be keep in mind when budgeting for a new addition?
Jennifer McDermott: There are a number of things parents should keep in mind when budgeting for a new addition. First, income will be more restricted whether going from two to one income, or one person reducing their hours. So the pool of funds to budget from is going to be smaller.
Jennifer McDermott: Second, there are always going to be incidentals you hadn’t thought of. These could include things directly related to the baby such as more clothes or accessories you hadn’t realized you need or indirectly related such as spending more on takeout because you are too time poor to cook. Be sure to budget for a buffer to cover these things.
Jennifer McDermott: The third is budgeting for the future. From moving to a bigger place to affording education costs, the earlier you start thinking about your family needs in years to come, the easier it will be when that time arrives.
Daniela: Thanks for this overview; in terms of money saving strategies do you have any tips for parents?
Jennifer McDermott: There are a number of money-saving strategies new parents can employ:
- Signing up for a meal delivery service is one. Many parents find their budgets swell with takeout costs as they are too tired and time-poor to shop or cook. This takes the stress out of cooking, provides the convenience of ordering in and all for a fraction of the price.
- Going light on clothes purchases is another. The hand-me-downs you get from other parents, plus gifts you are sure to receive, more than cover what your baby needs. Babies outgrow clothes so quickly in their first few months, parents find they are spending on clothes for one or two wears only. Use the money for a savings plan for your baby that can generate interest and be used later for something special, such as college.
- Automate bills to avoid any late fees which can happen to new parents who incur penalties for missing deadlines by a day or two given their routines are shaken up.
- Toiletries are another big cost new parents can cut down on. Rather than buying two different sets of shampoos and bath soap for the baby and adults of the house, buy just one set that will be gentle enough for baby that you can also use.
Daniela: Thank you for sharing these great tips with our readers. In terms of meal delivery service, how would this compare financially to freezing dinners prior to baby’s arrival?
Jennifer McDermott: Cooking and freezing dinners is a great option but for only a very limited time – a typical freezer would only hold food for the first couple of weeks. A meal delivery service can be a great buffer within the first few months, while still providing the variety that take out does. So while cooking and freezing would be a great cost saver for a couple of weeks, in the longer term, meal delivery makes more financial sense.
Daniela: We’re here to analyze every aspect of money-saving so grateful for your insight on that. You also rightly mention the speed at which babies and children grow out of clothes. In terms of gifting, would having a gift registry make sense in this regard? And what kind of items would be best for such a list – all whilst keeping in mind the need for keeping a tab on baby-related expenses…
Jennifer McDermott: A gift registry is a great way to save expecting parents, plus their friends and family, money. Loved ones are going to gift new babies regardless, so might as well be things that are needed. For the registry, move away from items such as toys and clothes, of which you only need minimal amounts of before they become obsolete, and move towards practical items such as a changing table, pacifiers, bibs, swaddling blankets and giant packs of diapers.
Jennifer McDermott: “A gift registry is a great way to save expecting parents, plus their friends and family, money.”
Daniela: The giant packs of diapers will definitely come in handy! You also suggested automating bills, which is also a very good recommendation. My only question would be, since everything will be done automatically there is a possibility that actual costs might be overlooked; do you have any tips as to how parents can still stay atop of such expenses?
Jennifer McDermott: Automating bills should be used as a strategy to avoid late fees, rather than not reviewing bills altogether. Once a bill is received, new parents have some time to review and dispute any charges that appear to be in error. It would pay to set some time aside once a month to review all automated charges that have gone through to see if anything is out of the ordinary.
Daniela: Your suggestion on toiletries purchases is also an interesting one. Since such items are non-perishable though – and this also applies to other items such as laundry detergents and the such – would buying the same for all be financially better over buying different items, but in bulk?
Jennifer McDermott: Buying the same product will almost always pay off financially, particularly if you buy these items in bulk. To get a better grasp on what is the best option in toiletries for their family, new parents should compare the unit price of different products. Some stores display the unit price, whereas others you will need to work out the cost divided by measurement. Whichever is the lowest will be the best value and usually (but not always) this ends up being that which is sold in larger volumes.
Daniela: A slightly different angle now: in terms of budgeting, would you say there is one method that beats the rest, in terms of allocating percentages and the such? What would be the most financially feasible combination of expense-allocation vis-a-vis income?
Jennifer McDermott: There is no one hard and fast rule that will apply to all expecting parents. There are a lot of variables that come into play including income, savings, where you live and what resources you have available.
Jennifer McDermott: However, a good approach to take is the 50/30/20 budgeting breakdown. 50% should go to necessities such as rent, bills and baby needs. 30% is your disposable fund for things that you don’t need but want and 20% should go towards savings, giving you that buffer for incidentals.
Jennifer McDermott: Expecting parents may want to play around with these ratios; for example, if they have reduced expenses that require less than 50% of income. Many may also want to be as frugal as possible, and drive that 30% of disposable funds down and bump up the 20% of savings.
Daniela: Great, this will come in very handy to our readers. On a final note, what would be that one financial tip that you’d give expectant parents as they prepare for their baby’s arrival?
Jennifer McDermott: I would suggest parents stay rational with their spending. It is very easy in the height of excitement to get carried away and overspend on what is perceived to be the best products or cutest clothes. The best way you can prepare and provide for your baby is to think ahead and save for the future.
Daniela: Thank you for this insight Jennifer; it’s been a pleasure speaking with you today on such an important subject!
Jennifer McDermott: Thank you, Daniela!