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 Helpful Apps for Families on a Tight Budget

Because it's hard enough to maintain a budget for one, let alone your entire family.

It’s hard enough to keep a budget for one, let alone get your entire family on track with their finances. Fortunately, there are plenty of apps out there that can help keep you, your spouse, son, daughter and 11-year-old pug (OK, maybe not that last one) from spending beyond your family’s means.

Here are some choice apps that can help with your household budgeting.

1. Goodbudget

Platforms: iOS and Android

Essentially a digital version of the envelope system — you know, where you put money allotted for a particular spending category in one and then don’t use any dollars beyond that — this app syncs up across household devices. That way, everyone in the family can know exactly what’s left to spend on groceries, entertainment and other categories each month. The free version lets you set up 10 regular envelopes and 10 annual envelopes across two devices. A subscription service with unlimited envelopes and device syncs costs $5 a month or $45 a year.

2. You Need a Budget

Platforms: iOS and Android

You Need a Budget (YNAB) is another app that lets folks sharing finances sync their devices and work together. This app pairs with web software of the same name to help users implement the YNAB four big rules: give every dollar a job, embrace your true expenses, roll with the punches and age your money. You can try the latest version, launched in late 2015 and dubbed “The New YNAB,” for free for 34 days. After that, a subscription costs $5 a month or $50 a year.

3. Home Budget

Platforms: iOS and Android

This digital expense tracker from Anishu includes a feature called Family Sync, which — you guessed it — enables household devices to exchange income and spending information within a single, shared budget. There’s a free version (Home Budget with Sync Lite) which limits your expense and income entries, and a paid version (just plain ol’ Home Budget with Sync) that costs $5.99.

4. Wallet by BudgetBakers

Platforms: iOS and Android

This budgeting app lets your share selected accounts with family members so everyone knows what’s going on with the household budget. You can also choose to connect your bank accounts to the app to get automatic updates about their standing. Wallet has a free version with limited features and several paid subscription versions that vary in cost. Its top tier, called Master plan, allows up to 10 users, unlimited bank connections and customized financial analysis. It costs $5.49 a month or $44.30 a year.

5. EveryDollar

Platforms: iOS and Android

This budgeting app helps people apply the money management principles of budgeting guru Dave Ramsey. It syncs across devices so you can budget from your smartphone or your household desktop. There’s a free version and a Plus subscription, which lets you connect your bank accounts to the app and call for support. It costs $9.99 a month.

Balancing the Family Budget

Remember, you’ll want to read the terms and conditions of any app you’re looking to use so you know what it costs, how your data is protected and whether any information will be shared with third-parties. You can find more information for vetting mobile apps on the Federal Trade Commission’s website.

And, when it comes to maintaining a household budget, it’s also important to keep track of your credit because a bad or even fair credit score can really cost you on everything from mortgage interest to your family’s cell phone plan.

If your credit isn’t in great shape, you can improve your scores by disputing errors on your credit reports, paying down high credit card balances and getting delinquent accounts back in good standing. And, as always, you can maintain good credit by paying all your bills on time, keeping debt levels low and adding a mix of new credit accounts over time. 

Image: golero

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