Canadian Finance Blog

Making Smart Financial Decisions with a New Baby

Posted: 09 Jun 2011 02:00 AM PDT

It’s no secret babies are expensive. Even the most frugal couples find themselves throwing their carefully planned budgets to the wind in preparation of the arrival of a new baby. But some forethought can save you some serious cash on your upcoming bundle of joy and set you on the right path financially after the baby arrives. Here we’ll explore some cost-saving measures you can take to save you money in the long run and some financial decisions you should think about before the baby arrives.

Network for gently-used items

Many parents follow a common line of thought that since the baby is new that everything the baby will use must be new as well. In reality, you can get your fill of “new” things at a baby shower and rely on used items for the rest. Products for newborns and babies are notoriously overpriced because retail stores know proud parents will pay a premium for them. But the following facts remain unchanged: babies outgrow clothing incredibly quickly, lose and break countless toys, and use age-specific furniture for only a few short years. So that pricy solid oak crib, bassinet and dresser drawer set you’re drooling over at that department store? It’s a poor investment. Most of it will be collecting dust in your garage three years down the road. Petition your friends for their used baby clothing, furniture and toys and search online for deals on used items. If you are paying full price for baby clothing, furniture or toys, you’re paying too much.

Prepare for the possible loss of one income

In two-parent households, mothers often opt to stay home and raise their baby full-time while their partner resumes work. If the mother had been contributing to the family income, this can mean quite a bit of financial adjusting, particularly since many women today are the primary bread-winners in their household. Couples will not only need to adjust their budget to account for the loss in income, but they will also need to account for the addition of a new little mouth to feed. The lifestyle changes involved in this financial adjustment could be dramatic.

Consider cloth diapering

Using cloth diapers instead of disposable diapers may take a little extra effort, but can add up to hundreds of dollars in savings on diapers every year. In the past five years alone, cloth diapers have seen a resurgence in popularity, particularly among the “natural parenting” set. Now the frugal community has started embracing cloth diapers as a cost-cutting opportunity for parents. The initial up-front investment in cloth diapers is always higher, but in the long-term, most parents report using cloth diapers saves them a great deal of money in the long-term.

Begin saving for college

The arrival of a new baby marks the time to begin planning for that child’s future. It’s a good time to open a Registered Education Savings Plan (RESP) to help your child pay for his or her college education down the road. The government encourages kicking off an RESP by offering financial incentives.

Don’t give in to “baby guilt”

Finally, when your friends are pulling out all the stops to paint and deck out a baby room for their new baby, buying $500 strollers and other expensive items, it can be tempting to believe you’re a bad parent for not doing the same. But would you really be going all out for the baby? Does the baby care that he sleeps in a freshly painted room with an $80 mobile twirling above him or is it you who cares about these luxuries? Ask yourself these questions before needlessly spending based on “baby guilt.”

Author Bio: This guest contribution was submitted by Pamelia Brown, who specializes in writing about associates degree. Questions and comments can be sent to: pamelia.brown @ gmail.com.

Making Smart Financial Decisions with a New Baby originally appeared on Canadian Finance Blog on June 9, 2011.