My wife and I recently became new parents. As we've slowly adjusted to the lifestyle, we've quickly realized that we had to make some changes to our spending now that we're on a single income. A drop in a household income can hurt, but combine that with the added expenses of a new child and you could bust your budget. Here's how we prepared for this shift in income.
We Updated Our Budget
Before my wife took her maternity leave, we calculated how much she'd be getting from Employment Insurance. Even though she qualified for the maximum amount, it was still a considerable drop from her regular income. We also calculated some rough expenses for our child which included diapers, clothes, and accessories. With all of that information, we updated our budget and realized that we had to cut back on a few things, including vacations, our entertainment budget, and savings to make the numbers work. Fortunately, we had already built up our emergency fund, so we did have some money available in case something came up.
We Managed Our Expectations
As soon as we found out that we were expecting, we knew we had to manage our expectations. It's tempting to buy brand name things for your child, but costs were a factor when it came to our purchasing decisions. Brand names made sense at times and so did buying some items used. We also tried our best to only purchase things the baby would actually need. However, I'll admit that there are a few things we bought that probably weren't necessary.
We Got Help from Friends and Family
What we quickly realized is how great our friends and family are. We're fortunate that many of them asked what we needed and were more than happy to gift us diapers, books, toys, etc. They took no offence when we told them we already had too much of something and were happy to give us something more practical (like more diapers). More importantly, our friends and family were happy to help us cook meals during the first few months, which saved us time and money.
We Considered Our Childcare Options
Childcare spots are tough to come by. In our area, the average wait time is 18 months. In other words, we were looking for a daycare before our child was even born. In addition, we were looking at a cost of $1,500 - $1,800 a month for childcare at the start. Although we wouldn't have to worry about those monthly fees for some time, we did have to factor them into our future budget. In some cases, it makes more sense for a parent to stay at home instead of returning to the workforce. We haven't decided what we'll do yet, but at least we know the numbers.
Becoming a new parent is challenging in many different ways. By paying close attention to the change in our finances, we've been able to adjust our budget without sacrificing much. If you're a new parent or expecting a child, you can get the hang of it, too.
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