Affording a Second Child: How to Make Your Budget Work

Having kids is anything but cheap. According to the USDA, families can expect to spend an average of $233,610 raising a child born in 2015 through age 17—and that’s not including the cost of college. The cost of raising a child has also increased since your parents were budgeting for kids. Between 2000 and 2010, for example, the cost of having children increased by 40 percent.

If you’ve had your first child, you understand—from diapers to day care to future extracurricular activities, you know how it all adds up. You’ve already learned how to adjust your budget for baby number one. How hard can it be repeating the process a second time?

While you may feel like a parenting pro, overlooking tips to prepare financially for a second child could be bad news for your bank account. Fortunately, affording a second child is more than doable with the right planning.

If your family is about to expand, consider these budgeting tips for a second child:

1. Think twice about upsizing

When asking yourself, “Can I afford to have a second child?”, consider whether your current home and car can accommodate your growing family.

Think twice about upsizing your car or house if you're concerned about affording a second child.

Kimberly Palmer, personal finance expert at NerdWallet, says sharing bedrooms can be a major money-saver if you’re considering tips to prepare financially for a second child. Sharing might not be an option, however, if a second child would make an already small space feel even more cramped. Running the numbers through a mortgage affordability calculator can give you an idea of how much a bigger home might cost.

Swapping your current car out for something larger may also be on your mind if traveling with kids means doubling up on car seats and stowing a stroller and diaper bag onboard. But upgrading could mean adding an expensive car payment into your budget.

“Parents should first decide how much they can afford to spend on a car,” Palmer says.

Buying used can help stretch your budget when you’re trying to afford a second child—but don’t cut corners on cost if it means sacrificing the safety features you want.

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Families can expect to spend an average of $233,610 raising a child born in 2015 through age 17—and that’s not including the cost of college.

– USDA

2. Be frugal about baby gear

It’s tempting to go out and buy all-new items for a second baby, but you may want to resist the urge. Palmer’s tips to prepare financially for a second child include reusing as much as you can from your first child. That might include clothes, furniture, blankets and toys.

Being frugal with family expenses can even extend past your own closet.

“If you live in a neighborhood with many children, you’ll often find other families giving away gently used items for free,” Palmer says. You may also want to scope out consignment shops and thrift stores for baby items, as well as online marketplaces and community forums. But similar to buying a used car, keep safety first when you’re using this budgeting tip for a second child.

“It’s important to check for recalls on items like strollers and cribs,” Palmer says. “You also want to make sure you have an up-to-date car seat that hasn’t been in any vehicle crashes.”

3. Weigh your childcare options

You may already realize how expensive day care can be for just one child, but that doesn’t mean affording a second child will be impossible.

A tip to prepare financially for a second child is to weigh your childcare options.

Michael Gerstman, chartered financial consultant and CEO of Gerstman Financial Group, LLC in Fort Lauderdale, Florida, says parents should think about the trade-off between both parents working if it means paying more for daycare. If one parent’s income is going solely toward childcare, for example, it could make more sense for that parent to stay at home.

Even if this budgeting tip for a second child is appealing, you’ll also want to think about whether taking time away from work to care for kids could make it difficult to get ahead later in your career, Palmer adds.

“If you stay home with your child, then you’re also potentially sacrificing future earnings,” she says.

4. Watch out for sneaky expenses

There are two major budgeting tips for a second child that can sometimes be overlooked: review grocery and utility costs.

If you’re buying formula or other grocery items for a newborn, that can quickly add to your grocery budget. That grocery budget may continue to grow as your second child does and transitions to solid food. Having a new baby could also mean bigger utility bills if you’re doing laundry more often or running more air conditioning or heat to accommodate your family spending more time indoors with the little one.

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Gerstman recommends using a budgeting app as a tip to prepare financially for a second child because it can help you plan and track your spending. If possible, start tracking expenses before the baby arrives. You can anticipate how these may change once you welcome home baby number two, especially since you’ve already seen how your expenses increased with your first child. Then, compare that estimate to what you’re actually spending after the baby is born to see what may be costing you more (or less) than you thought each month. You can then start reworking your budget to reflect your new reality and help you afford a second child.

5. Prioritize financial goals in your new budget

Most tips to prepare financially for a second child focus on spending, but don’t neglect creating line items for saving in your budget.

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“An emergency fund is essential for a family,” Palmer says. “You want to make sure you can cover your bills even in the event of a job loss or unexpected expense.”

Paying off debt and saving for retirement should also be on your radar. You might even be thinking about starting to save for your children’s college.

Try your best to keep your own future in mind alongside your children’s. While it feels natural to put your children’s needs first, remember that your needs are also your family’s—and taking care of your future means taking care of theirs, too.

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“Putting money aside when you’re expecting can help offset the sticker shock that comes with a new member of the family.”

– Kimberly Palmer, personal finance expert at NerdWallet

The key to affording a second child

Remember, the earlier you begin planning, the easier affording a second child can be.

“Putting money aside when you’re expecting can help offset the sticker shock that comes with a new member of the family,” Palmer says. Plus, the more you plan ahead, the more time you’ll have to create priceless memories with your growing family.

The post Affording a Second Child: How to Make Your Budget Work appeared first on Discover Bank – Banking Topics Blog.

Source: discover.com

Gratitude in a Difficult Year

This year took so many twists and turns we haven’t been able to keep count– often leaving us in complete overwhelm with a whirlwind of thoughts and emotions. Grief, anxiety, and sheer disappointment are just a handful that comes to mind when we reflect on the endless amount of curveballs life has thrown over the past year. Tragedy and loss plagued the entire world, leaving us speechless day after day. Despite the darkness that loomed for what seems like an eternity there has been an outpour of positives that we can’t forget to remember. As 2020 quickly comes to a close, let’s take the time to decompress and reflect on the happier moments we were lucky enough to live through and witness. Even though Thanksgiving may look less traditional than previous years, we still can readily name some things that shift our hearts to a place of gratitude.

Family first

Let’s face it – the hustle and bustle of life impact our family and friends more than we’d like to admit. Competing schedules, conflicts, and not making enough time for those that matter are often reasons why we are unable to nurture the people we hold near and dear. Because of restrictions on travel and other entertainment, we were forced to become more creative with our time indoors; in turn, helping us to restore the meaning of family and work-life balance. Quite frankly, it allowed us to hit the pause button on everything that probably was unintentionally too high on the priority list in the past. Our families served as the safety net it’s supposed to be when the weight of the world (and social media) became overbearing with less than desirable news. We utilized technology to a new degree when scheduling virtual happy hours, catch up sessions with our loved ones, and birthday celebrations in other geographic areas. It made us truly appreciate the very thing we took for granted; all the people that make up our family tribe.  

Curating and developing passions

2020 generated a newfound level of introspection, leaving our minds to really consider what it is that we really cherish the most. Whether it be career-related or new passion projects, this year made room for some much-needed self-reflection, making us reassess where our fulfillment really comes from. Leveraging books, social media outlets, and various streams of consuming knowledge-based information sent us on a path of rediscovery. Remember that ‘other’ to-do list that’s filled with the things you really don’t want to do around the house? It even made that list appear fun-filled! Home improvement projects and DIY tasks were done with enjoyment while being budget-friendly. Adulthood can be full of things that aren’t as exciting, but mustering up the courage to take ideas from ideation to execution served as a second wind. New business ventures and side hustles were birthed with unmatched creativity, a place many of us haven’t been in quite some time. Existing businesses were able to thrive despite the unprecedented events occurring nationally. Funding was also provided to various business owners which granted many small businesses to increase their visibility while positively generating profit. 

The importance of sustainment

There are a countless number of families that were impacted by job loss and/or unexpected expenses. It doesn’t matter if things started off rocky financially – what matters most is you’re still standing. Getting caught up on bills, eliminating some debt and saving are all things to be very proud of. Temporary hardships don’t have to turn into permanent problems. Creating a plan of action and sticking to it no matter what arises will always be rewarding. Celebrating the small wins should never be overlooked. We’ve all handled this year in different ways – but what’s most important is discovering what works for you. Rule of thumb for those that are battling with the ‘not enough’ emotions: don’t believe the hype. While there is a multitude of people accomplishing great things, there are also many imposters. Social media is a highlight reel, a virtual platform where people can share whatever information they choose, at their discretion. People are more likely to share their highs versus their lows, so be sure to keep in mind you may only be getting a small piece of the overall story. Don’t look at someone else’s life and fail to recognize what you’ve done on your own. Financial progress, no matter how insignificant you may think it is – is still progress. We all make financial missteps and life has a way of making things very difficult that hit us where it really hurts. Keeping your head above water, remaining afloat, maintaining your health, and providing for your family should never be considered a small feat. Grant yourself some grace and reflect on the dedication it took for you to get (and stay) where you currently are.

Back to the basics

This year forced us to really hone in on what matters and prioritize accordingly. This applies to our lives, but most importantly our finances. Pulling back the curtain to really take a look and evaluate where money was going served as a constant reminder that we should be doing this more than the occasional once or twice a year. It’s never too late (or too early) to create new money habits! Financial stability is essential – and maybe the cushion we imagined should be enough proved itself to be untrue. Our willingness to make changes at a faster rate to ensure the financial security of our families felt less painful and so much more intentional. The uncertainty of everything occurring allowed us to complain less while redefining comfort levels with our contingency plans.

No matter what has transpired this year, what are you most thankful for? As things come to mind be sure to jot them down. Reference them when your days seem laborious or when your feelings try to force you to reflect on things that aren’t as positive. It’s clear we don’t know what the future holds, but we do know (and have been reintroduced) to the moments, things, and people that continually keep us hopeful and thankful – no matter what lies ahead.

The post Gratitude in a Difficult Year appeared first on MintLife Blog.

Source: mint.intuit.com

Making Finances a Family Affair

As a child, money really doesn’t hold the same value as it does in our adulthood. Children only think about money and finances in general when it relates to something they want or think they need – often tangible items like clothes, shoes, or that shiny new toy.

Maybe we had the same ideals during our adolescence until life showed us differently. No matter how we were raised or how finances specifically were (or were not) talked about, it’s important we leverage what we know now and create an environment where the entire family can benefit – no matter the age.

Have open and honest conversations

In many households, the topic of money was completely off-limits to children and categorized as an “adult” conversation. While we all understand that kids should in fact – be kids, that doesn’t necessarily mean we should withhold them from these conversations.

Finances can be tailored for all age groups and frankly, you would be surprised how quickly they’re able to pick up information. For example, if there are mistakes you’d like to prevent your child from making (or at least generate awareness), use real-life experiences to help paint the picture for them.

What are some patterns or behaviors you fell into in your younger years? What would you tell your younger self if you had the ability to? Use these questions to generate a list of things to talk about as the situation allows. They may not be able to grasp things fully, but they will have the background knowledge you provided to help generate better decision-making skills as it relates to finances. 

Every moment is teachable

Since children don’t have the responsibility of paying bills, they’re typically oblivious to the consequences (good or bad) of things. If your little ones have a hard time remembering to turn off lights when they’re not in use or turn the water off when brushing their teeth – bring it to their attention. Explain to them that utility bills are not free and every little bit helps. While it’s not about being a drill sergeant and patrolling their every move, it’s certainly about creating children that are aware and mindful.

If you all are in the grocery store and they want to pick every single cereal in the aisle, you can easily explain why it’s important to select a couple of boxes versus ten. As much as growing children eat, they don’t need ten different boxes of sugary cereal. This is the opportunity to go into depth about food being readily available when the boxes selected run low. Also, food in fact does go bad if not eaten in a time period which creates more waste – on top of wasting money!

Discuss the importance of saving early and often

From the piggy bank days, we understand why it’s so important to save. Emergencies happen, unexpected occurrences are a part of life, and having multiple nest eggs to fall back on creates a sense of financial peace. Open a savings account for each child and talk about why it’s important to save.

Many banks have checking and savings accounts tailored for minors. If they receive an allowance, have a hobby that generates some income. If they are old enough to seek employment, make sure you all are discussing their own personal finance goals weekly.

Keeping this at the forefront of their minds may be annoying to them, but children require positive reinforcement. Repetition is key and they will thank you later for all of the valuable information you provided. Saving doesn’t have to be painted as this laborious, boring topic. Understand, children will make mistakes – but didn’t we all?!

Create an environment that helps them build a money mindset

The power of analysis and critical thinking are some of the most influential skills to have and put to good use. Creating a safe space for your children to ask questions, make good choices, make not-so-good ones and learn from them is the most fulfilling thing we can do as adults to help mold their impressionable and sharp minds. How many of us were reactive versus proactive about money? No matter where you fell or fall today on the spectrum – we can use everyday happenings to help them understand the future is just as important as the present.

Let’s say your child wants to buy something. The first step would be to ask them questions like, “How much is this item? Why do you want this item? What can this item do for you? Do you want to save up so you can purchase it?” Allow them to think these answers through; this helps them process the value of obtaining the product. Next is the saving process. This physically helps them show the “waiting period” – the time you identify an item and the actual time period it takes to acquire the funds to purchase. Sometimes, during this process, they may identify something else they’d like or completely scrap the product altogether. During this waiting period, you can also ask questions like – “Will you have money left over after this item is bought? Has anything changed about what you’d like to buy?” These critical skills are important and will help shape their ability to be sure in their decisions or pivot. Finally, the thing they’ve been waiting for – buying time! This is the gratification period where they’re able to see their ability to save and the outcome of their hard work.

Be the change you wish to see

All of the examples previously mentioned not only help our children, but they help us too. Removing finances from the taboo list now creates a new audience – our kids. They become our overseers, to help challenge us on our own financial decisions. This is a win-win for everyone involved. When it comes to family outings, vacations, or any planned functions – incorporate the children in these exercises. Money can indeed be a family affair and a constant teaching lesson for everyone!

The post Making Finances a Family Affair appeared first on MintLife Blog.

Source: mint.intuit.com