How New Parents Can Budget For Child Care

Plan ahead as much as possible.

[Disclosure: Cards from our partners are mentioned below.]

Having a new baby on the way is an incredibly joyous time for most families, but it can also be stressful. After all, babies require a lot of care — they need to be fed and changed, and then there’s the diapers, clothes, bedding, car seats, toys, healthcare … it can be overwhelming, both emotionally and financially.

Add to that the tremendous childcare expense — the average annual cost for child care in the United States is higher than the average cost of in-state college tuition — and it can feel downright impossible, especially if your finances are already tight.

Fortunately, there are some things you can do to help you budget for child care. We talked to Katie Bugbee, senior managing editor of Care.com, a website dedicated to helping families and caregivers connect in a reliable and easy way. She shared some ideas on how to start saving at every stage.

“Obviously, the earlier people can start saving the better,” Bugbee said. “When you have babies on the brain is a good time to start cutting back. As much as you want to celebrate the last few years without kids and enjoy them, you should also really make sure that you have enough money moving forward to live as comfortably as possible with the additional expenses.”

Before Baby Comes

There are a multitude of things you can do to save money before you have a baby on the way. From cutting back on your daily $3 coffee to skipping that new outfit for work and even buying used items instead of new.

You can also save money by using a cash-back credit card for your everyday purchases. Some of the best cash-back cards can help you earn rewards on pretty much everything you buy. Of course, most of these cards require you have good credit. But, if you don’t, it’s good to keep in mind there are credit cards for bad credit and some — like the Discover it Secured card or the Capital One Secured MasterCard — even offer cash back rewards. Even better, they’ll help you build and improve your credit if managed properly. You can see what your credit situation is by reviewing your free credit report snapshot from Credit.com, which updates monthly.

Of course, you can also save in larger ways. Instead of moving into a bigger, nicer apartment or house, stay where you are for now. That way, you keep your housing budget reigned in while you put more money into savings for your new baby.

If you have the cash flow, set up a savings account especially for baby, and consider skipping that fabulous week long vacation to St. Lucia and opt instead for a long weekend visiting friends. Here are 7 other money moves to make before baby arrives.

When Baby Is On the Way

When you know your baby is on the way, it’s time to really get busy with the saving, especially if you didn’t so earlier. One option is to see if your employer offers flexible spending accounts that cover child care. If so, it could be worth setting up and reaping the tax benefits it will provide. You can also ask if there’s a child care subsidy available, or if there is in-office child care.

Now is also a good time to talk to your accountant or financial adviser about how best to plan for your new family addition. Are there additional tax breaks to consider?

You might also want to begin researching child care options in your neighborhood. There’s a lot to consider, and your financial situation will likely dictate what choices you make. Will you want at-home care? If so, a nanny share can be a great way to cut your costs. Will you opt for a family day care center instead? Are there any in your neighborhood that offer a sliding pay scale that fits your financial situation?

“Going and getting the best care for the most affordable option is what you need to charge yourself with,” Bugbee said. “I strongly recommend using message boards for that, because you probably don’t even know half the daycare or nanny options in your area.”

She suggested trying out sites like Bigtent.com to find child care options near your home. These are closed groups that will want to verify you live in the area, but once that hurdle is out of the way, they can be incredibly helpful, Bugbee said.

You may also want to consider Facebook groups for parents, which can also be very helpful in finding affordable child care services through people who have already used them, she said.

When Baby Arrives & Every Day After

Now is the time to start looking for ways to save money on baby gear itself.

“The only new things you really need are cribs and car seats,” Bugbee said, adding that pretty much everything else can be bought used. Be sure to check for recalls on used products, however, as well as expiration dates where applicable. The money you save can be used toward child care.

Bugbee also suggested using Amazon Mom to help save money on things like diapers, sippy cups, bottles and more.And remember that cash-back rewards credit card we mentioned earlier? Putting it to use on essential purchases can help you save even more. (As far as shopping on Amazon goes, you may find a lot of value in their credit card, which we reviewed here.)

At the end of the day, you want what is best for your child. Saving money wherever you can help you provide a better life for them now and in the future. And teaching them to do the same can help them be financially secure even when you aren’t around to watch after them.

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5 Signs You’re Not Ready to Be a Stay-at-Home Parent

It's a big decision to stay home after having a baby — but doing so isn't an option that is right for every mother.

Sometimes new mothers have a hard time deciding if they want to return to work after their baby is born, especially after bonding with their child during maternity leave. Sometimes there is no choice — like if you’re a single parent or your family can’t afford to live solely on your partner’s salary — and there’s not much left to do but head back to the office.

Women who have the option to stay home with a baby may have trouble weighing the pros and cons. As hard as it is to decide, there might be some fairly obvious signs that you’re actually not ready to be a stay-at-home mom. Of course, these tip offs apply to all those prospective stay-at-home dads, too.

Here are a few signs you’re not ready to be a stay-at-home parent.

1. You Have a Budget But Don’t Follow It 

Having a budget is one thing, but following it is something entirely different. Just because it looks like you have your finances under control on paper, if your credit card statements tell a different story, you might need to reconsider staying home, at least until you can get your spending under control. (Curious how your credit card debt is affecting your credit? You can see a free snapshot of your credit report here.)

Having a baby is bound to bring in even more expenses (according to the Department of Agriculture, the current cost of raising a child through age 17 is a whopping $233,610), so if you already have trouble following a budget — or you haven’t updated your budget yet to include everything your baby will need — you may want to consider seeing what following an updated budget would be like for at least a month before deciding if you can afford to live on one salary.

2. You Haven’t Saved for Retirement Yet/You Have No Retirement Savings Plan if You Quit

It’s no secret that Americans are worried about retirement. In fact, one recent survey found that 56% of Americans lose sleep over saving for retirement, while another found that 38% of millennials find retirement to be a significant financial stressor. Even if you have started saving but it’s been a few years since you’ve checked in on your progress, it may be time for a bump in how much you put away … something that will be much more difficult to do if you decide to leave your job.

Of course parents who decide to stay at home do have options when it comes to retirement (spousal IRAs, self-employed retirement funds and rollover accounts, to name a few). But if you don’t qualify for them, don’t care to look into them or can’t afford to put anything else away if you leave your job, it’s probably best to reconsider leaving until you can. You can read this guide to learn more about IRAs.

3. Your Partner’s Health Insurance Options for You & Your Baby Are Subpar at Best

While the future of healthcare is a little shaky right now, there’s one thing you can safely assume no matter what happens — you and your baby will need some. Newborns spend the first six months of their lives visiting a pediatrician at least once a month (often much more frequently in their first few weeks), and new moms, in particular, will have plenty of check-ups with their OB as well. These aren’t things you’ll want to do without health insurance, so if your partner’s options for you and your child don’t stack up, staying on yours until something better comes along is a good idea.

4. Your Emergency Savings Account Is Minimal

You might think having three months worth of bills covered in an emergency account is great — and it is — but it might not be enough if you’re considering leaving your job. Experts recommend having at least three to six months’ worth of bills covered in an emergency savings account, and that doesn’t really take into account all the extras that come along with having a baby. If you’ll be moving into a house from an apartment for more space, assume that you’ll have random projects pop up that will start draining that emergency fund quickly. If your partner can afford to keep funding the account to cover for any withdrawals you take or to provide you with more of a cushion that’s one thing, but if the account has been stagnant for a while and your family can’t afford to put anything else away right now, maybe a better idea is to stay at your job and slowly build up the emergency account a bit more so that when/if the time comes that you leave your job, you’ll feel more secure knowing your emergency funds are all there.

(And, if you don’t have a savings account at all, you’ll want to start socking away dollars ASAP. No need to panic, though: This piece will help you create an emergency fund in 30 days or less.)

5. You Struggle Spending All Day Alone with the Baby During Work Leave

Let’s be honest — babies are tough to take care of. So if you find it difficult to stay positive while on maternity or paternity leave, that might be a sign that you’re not quite ready stay home full time with a baby. Working is about a lot more than just a paycheck — it’s about having some time to yourself (funny how commutes suddenly become a wonderful thing) and with other adults, and it’s about having a job to do that both stimulates and fulfills you. If you don’t think staying at home with a baby will do all of those things for you, it’s probably best for you, and your family, if you head back to work.

This story is an Op/Ed contribution to Credit.com and does not necessarily represent the views of the company or its partners.

Image: g-stockstudio

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