90 percent of new parents are Millennials. At the same time, U.S. consumer debt is reaching 20 percent of GDP with Millennials owing most of it in the form of student loans and more.

Douglas A. Boneparth, CFP®, shares some tips on how to financially prepare for baby, prioritizing, and what to be careful about as a Millennial on the path to parenthood.

Daniela: Good morning Douglas and welcome to Dreaming of Baby! We’re looking forward to having your views and tips on the financial aspects of first-time parenthood for Generation Y – the Millennials. Before we proceed with our discussion, grateful if you could introduce yourself to our readers.

Douglas A. Boneparth, CFP®: Sure! My name is Douglas A. Boneparth and I am New York City’s Financial Advisor for Millennials and president of Bone Fide Wealth, a Manhattan-based wealth management firm that specializes working with, of course, Millennials. I co-authored The Millennial Money Fix with my wife, Heather, so we could ultimately spread financial education across our generation.

 Daniela: Great, thank you for that introduction, Douglas. As our focus today is the financial aspect of first-time parenthood, what should Millennials be taking into consideration on the financial front before thinking of baby?

Identify the costs

Douglas A. Boneparth, CFP®: I’d first suggest that you remember that you can’t control everything. Don’t get me wrong, you can do an amazing job anticipating expenses of an incoming little one, but a lot of this is going to be a learning lesson as you go. However, you should indeed start to understand what the costs are going to be. Therefore, do your research! There’s no shortage of information out there. Dreaming of Baby is an excellent example! Understanding the costs of furniture, diapers, food, hedaycared day care is important. Now is a good time not just to know what you’re in for, but to take a step back and became a master of cash flow, which we discuss in the book. Having a child can change your financial game. It’s important, now more than ever, to know what’s coming in and going out of your financial life each month. 

Daniela: Before our interview, you noted the importance of learning what a real ‘month in the life’ looks like in terms of income/expenses – Can you elaborate on this please? 

Douglas A. Boneparth, CFP®: Sure, this goes back to mastering cash flow. I want you to know in intimate details what income and expenses looks like. So much so, that you’d have a pretty good idea what the next three months are going to look like. When you add a baby to the picture, you’re adding variability in cash flow and the best way to deal with that is to have a firm grasp or control over the situation. This allows you to adapt or pivot more easily. You won’t find yourself scrambling and reacting to your financial life, which is never good!

Douglas A. Boneparth, CFP®: “When you add a baby to the picture, you’re adding variability in cash flow and the best way to deal with that is to have a firm grasp or control over the situation.”

Daniela: Thanks for clarifying – very helpful. So, in your view, what would be the main factors that those thinking of parenthood should be taking into account in their planning – both in terms of cash flow and savings?

Douglas A. Boneparth, CFP®: Childcare is the biggest one. Depending on where you live, this can be very, very high. But no matter where you are, it’s a large expense. Also consider what happens to earnings when both spouses are working and maternity leave is not a benefit. This can be financially difficult, so planning can be a big help. You’d perhaps save some additional months of income so that you can get through those initial months.

Douglas A. Boneparth, CFP®: Back to childcare, if the expense is large, you are going to need to see how this fits in your month to month. So, again, mastering cash flow is going to let you do that much more easily than if you’re guessing. Heather and I started by sharing a nanny with our neighbor in the city. I watched Hazel for 2 days a week for the first 8 months of her life. I was lucky I could do that and run my business. It was hard, but boy do I miss all that time with her.

When maternity leave is not a possibility

Daniela: Well, finding a balance between work and parenthood is no easy feat! Sharing a nanny would be great when possible. You also mention maternity leave when this is not a benefit. Any tips to share as to how one can prepare for this?

Douglas A. Boneparth, CFP®: Again, be proactive and research. We found mommy Facebook groups to be invaluable! There was no better way to scope out the marketplace than to talk to other moms and parents about it. They can easily help you identify the computations for how much a nanny can cost and who has one to share. Social media is wonderful, isn’t it?

Douglas A. Boneparth, CFP®: But preparing for no maternity leave is almost always a matter of saving additional cash. You’re going to have a lot on your hands, so side-hustling is going to be hard, but it’s an option. This means working where you can when you’re home taking care of your child.

Saving for college vs paying college debt: Identifying your financial goals

Daniela: A question on a slightly different angle: At Dreaming of Baby, we have interviewed quite a few experts on college savings and the importance of starting early. This is quite striking, especially since many Millennial parents are still paying their own student debt. Do you have any tips on how this situation can be balanced?

Douglas A. Boneparth, CFP®: My view is to take care of yourself first. It might be selfish, but you’re right, Millennials have more student debt than any generation and it’s holding us back relatively speaking. I know we want to make sure our kids get an amazing higher education, but realistically, it falls to the back burner when we’re trying to achieve more pressing and immediate goals. That’s my take, but if you’re bent on making sure there are savings for your kid’s college, examine your goals and see what you’re willing to push out to make those contributions.

Douglas A. Boneparth, CFP®: We talk about an important system for goals in the book:

  1. Identify them (what are they)
  2. Quantify them (by time and value – when do you want to achieve the goal and how much is it going to cost)
  3. Prioritize them (identify which are most important so you know how to allocate your savings) 

Daniela: So, strategizing would be key here – Before this interview, you also emphasized examining the real ROI on a pricey education. Can you elaborate on this?

Douglas A. Boneparth, CFP®: Right. With loans being such a significant part of the way we pay for higher education, it can become difficult to actually see the financial benefit of getting an advanced degree. Making $17K more a year is great, but not when you are paying $18K in loans payments to get it! So, before you automatically think that educating yourself will lead to rolling in the dough, take the time to think ahead. What is that loan payment going to be and how much will your earning potential realistically go up when you complete your program? Please, please be honest with yourself here. It can lead to some serious financial missteps.

Douglas A. Boneparth, CFP®:”With loans being such a significant part of the way we pay for higher education, it can become difficult to actually see the financial benefit of getting an advanced degree.”

Daniela: It’s a very good consideration to make – especially as it’s something that will affect your financials as a family. Thank you for pointing it out. Speaking of debt, in terms of repayments, how can parents-to-be best strategize? 

Douglas A. Boneparth, CFP®: Get organized. First, know everything about your loans and write it down. Know the terminology and how loans work, see if refinancing is something that can benefit you. Studentloanhero.com is one of my favorite resources for student loans.

Daniela: Thanks for the tips, Douglas! On a final note, what would be your take-home financial advice for our Millennial readers embarking on the parenthood journey?

Douglas A. Boneparth, CFP®: Don’t let your worries about finances prevent you from having kids. Yes, understanding the money component is very important but if you keep putting it off, you might end up with no family at all. I think this is what my grandpa meant when he said, ‘Love finds a way’. 

Daniela: That’s beautiful! Thank you for your time today Douglas and for the helpful tips you have shared with our readers. It’s been a pleasure speaking with you. 

Douglas A. Boneparth, CFP®: Same to you! Thanks for the opportunity.

Douglas A. Boneparth, CFP® is New York City’s Financial Advisor for Millennials and president of Bone Fide Wealth, a Manhattan-based wealth management firm that specializes in working with Millennials.

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