New Parents: 11 Tips to Help You Manage Your Money After Your First Kid
So you’re a new parent. Congratulations! Being a parent will change your life in many ways — most of them for the better.
Unfortunately, it’s also super expensive. In fact, you’ll probably spend between $12,500 and $14,000 a year on child-rearing expenses, according to a government study.
Gulp! That’s right, you’ll be spending five figures on day care, groceries, clothes, toys, pediatrician visits… the list goes on and on.
Don’t be intimidated. You’ve got this! New parents like you need to rethink how to manage their financial lives after having a baby. To help you out, we’ve got some tips:
1. Get Creative with Child Care
Child care is a biggie, obviously. It tends to be one of the most expensive recurring costs parents face in the first few years.
There are ways to cut costs. Check out these options:
- Enroll in a school-based child care center. Numerous high schools and colleges across the country provide on-site child care staffed by students. Check your local school district or nearby colleges to inquire about programs, availability and cost of enrollment.
- Share the cost of a nanny. To make having a nanny more affordable, some families come together to share the nanny and split the cost. The nanny will likely charge more money for caring for two or more children instead of just one, but the cost will be less expensive than each family hiring separate nannies.
- Bring your baby to work. Parents can save thousands of dollars by taking their babies to work with them — even if just temporarily. This is especially helpful in a baby’s first months of life, because infant care is more expensive than care for a toddler or preschooler. This may not be a common workplace benefit, but the Parenting in the Workplace Institute has recorded more than 200 workplaces that offer it, ranging from small businesses to state government agencies.
2. Save on Expenses, Such as Car Insurance
Because you’ll be spending so much on food and child care, take steps to cut your costs elsewhere — such as your car insurance.
Car insurance companies aren’t one-size-fits-all, so you need to ask: Is your car insurance company the best fit for you, your car and the way you drive?
You can find out at Compare.com. Here, you don’t have to pay or commit to anything to get a true apples-to-apples comparison from many car companies. You get a quote that’s tailor-made for your vehicle.
In about one minute, you’ll get a bunch of quotes that are zeroed in on your particular needs. When you find one you want, Compare.com lets you sign up directly with that company. Easy peasy.
3. Get the Best Deal Possible on Life Insurance
Celebrating a new life isn’t usually the time when you think about end-of-life preparations. But buying life insurance is a smart money move when you have a little one who depends on you.
It’s good to have coverage for at least six to eight times your annual salary, but, even if you’re currently a stay-at-home parent, you should have life insurance.
A company like Policygenius offers you an easy way to compare and buy life insurance. Unlike traditional providers, this online-only platform provides an easy way to apply, and it offers instant quotes from top carriers online to help you make a quicker decision.
To get your quotes, you’ll just enter some info about yourself and your health online. Once you choose a life insurance company, you can apply right online, and a Policygenius rep will give you a quick call to ask a few follow-up questions.
4. Open a Separate Savings Account
Even though you’re spending a lot on everyday expenses, you’re still going to need savings.
We suggest opening an account dedicated to saving and putting your money to work. An app called Varo Money combines traditional banking tools with modern technology to help its customers become financially healthy.
Here’s the best part: Pair your Bank Account with a Varo Savings Account where you’ll earn 2.12%* Annual Percentage Yield (APY) with the opportunity to earn up to 2.80% APY on up to $50,000 in savings. To qualify for the 2.80% rate, you’ll need to have payroll or government direct deposits of $1,000 or more and authorize at least five purchases with your Varo debit card each month.
That’s 31 times — repeat, 31 times — the average savings account, based on a 0.09% average reported by the FDIC.
Varo goes easy on the fees, too. As long as you use one of the more than 55,000 Allpoint® ATMs in its affiliated network across the world, you won’t pay ATM fees.
Additionally, the minimum balance to open the account is just a penny; you’ll pay no monthly service fees, no minimum balance fees, no foreign transaction fees and no cash replacement fees. You’ll just pay any fees charged by out-of-network ATMs and cash deposit fees if you deposit cash in-store through the Green Dot® Network.
*Varo disclosure: APY is accurate as of January 29, 2019. This rate is variable and may change. No minimum balance required to open account. Balance in savings must be at least $0.01 to earn interest. Deposits are FDIC insured to at least $250,000 through The Bancorp Bank; Member FDIC.
5. Stay on Top of Your Credit Card Payments
A lot of us are being crushed by credit card interest rates north of 20%. And when a child enters the picture? Forget it.
If you’re stuck putting more money toward interest than your principal, consolidation and refinancing might be worth a look.
A good resource is Fiona, a search engine for financial services, which can help match you with the right personal loan to meet your needs.
Fiona searches the top online lenders to match you with a personalized loan offer in less than 60 seconds. If your credit score is at least 620, its platform can help you borrow up to $100,000 (no collateral needed) with fixed rates starting at 4.99% and terms from 24 to 84 months.
6. Save Money When Buying Baby Items Online
You’re going to be buying lots of toys and baby items. Make sure you get the best price!
One of our secret weapons is called Paribus — a tool that gets you money back for your online purchases. It’s free to sign up, and once you do, it will scan your email for any receipts. If it discovers you’ve purchased something from one of its monitored retailers, it will track the item’s price and help you get a refund when there’s a price drop.
Plus, if your guaranteed shipment shows up late, Paribus will help you get compensated.
Disclosure: Paribus compensates us when you sign up using the links we provide.
7. Save Money on Groceries
With a little one in the house, you’re going to be spending more time and money at the grocery store. We know it sounds strange, but Ibotta will pay you cash for taking pictures of your supermarket receipts.
Here’s how it works: Before heading to the store, search for items on your shopping list within the Ibotta app. When you get home, snap a photo of your receipt and scan the items’ barcodes.
Bam. Cash back.
Ibotta is free to download. Plus, you’ll get a $10 sign-up bonus after uploading your first receipt.
Some cash-back opportunities we’ve seen include:
- 25 cents back for any item.
- 25 cents back on any brand of baby food
- $1 back on flushable wipes
- $7 back on kids probiotic chewables
- $2 back on Huggies Pull-Ups
Notice a lot of those aren’t tied to a brand — just shop for the staples on your list and earn cash back!
8. Get Betty On Your Side for Dinner
Give Betty Crocker your email address, and it’ll send you up to $250 worth of coupons that can help you get deeply discounted or free canned goods, cereal and yogurt.
In addition to coupons, Betty Crocker’s free email delivers the best of Betty’s 15,000 kitchen-tested recipes, how-tos and more — straight to your inbox.
If you’re like us, you probably get bored making the same food week after week, so wouldn’t it be nice to occasionally be surprised with simple recipes you can make on a budget?
9. Order Your Groceries Online (No Messing with Car Seats)
No one warns you about this, but it’s true: Grocery shopping is HARD when you have a baby or toddler.
Here’s a handy parenting hack: Use Walmart’s grocery app to order your groceries online, then have the store bring your groceries out to your car for free.
This is the most convenient thing in the world when you don’t want to take baby out of the car, drag baby around the store, and then put baby back in the car while baby screams the whole time. Not that I’m speaking from experience or anything.
Ordering your groceries online can actually save you a ton of time and money because you’ll be forced to plan out your meals.
Plus, there’s no veering off into the snack aisle.
10. Save By Doing Nothing
The best kind of savings are the kind where you don’t have to do a thing. That’s what makes the Drop app so appealing.
What’s special about Drop is all you have to do is link your credit and debit cards (no coupon clipping or hoarding receipts!). When you make a Drop-qualified purchase, you’ll automatically earn points, whether you’re grocery shopping at Walmart, hailing an Uber or ordering a pizza.
The points will add up, and you can exchange them for gift cards in the app to popular retailers like Amazon and Starbucks.
Bonus: Through Dec. 31, enter the code TPH for 5,000 free Drop points!
11. Manage Your Money as a Couple
Saving money is hard. Throw another person into the mix — with very different views of how money should be saved, spent and managed — and it can feel impossible.
That’s why Twine was created.
The app specializes in helping couples save and invest toward their individual and joint financial goals. It provides financial advice and automated money management, and it makes collaborating on short- and long-term savings goals simple. Saving for a second car? Twine can help. Your dream home? It can help you map those savings out, too.
Bonus: Twine is offering Penny Hoarder readers $5 to open a savings account — one with a 1.05% variable interest rate. From there, you can set joint goals and guideposts, and keep an eye on your contributions and your partner’s.
If you prefer to handle your finances on your own terms, Twine allows you to set individual goals, too.
Twine can also assess your financial situation and help you start investing. Once you’ve socked away at least $100, you can start investing with a starter option (you’ll pay 25 cents per month for every $500 you invest).
Whether you’re saving as a team or investing in your own ideal life, Twine can help you start with what you have and work toward those big goals — and bigger dreams.
Mike Brassfield ([email protected]) is a senior writer at The Penny Hoarder. He and his wife have twin daughters.