It’s no secret that adding a new little member to your family can dramatically affect your finances. By some estimates, the average family spends about $10,000 before their child reaches the age of two.
So why is it so expensive to raise a baby today? Parents are bombarded with state-of-the-art educational toys, DVDs, surveillance-quality baby monitors and designer strollers. And don’t forget the cool Rolling Stones or Led Zeppelin onesies that baby has to have. The key to keeping baby finances under control is to understand the common mistakes new parents make that lead to the road of overspending:
Mistake 1: Equating Higher Price with Higher Quality
There is no doubt that every parent wants the best for their child. However, most overspending can be related to the idea that you have to spend more to get more. For example, have you compared the cost of name brand formula versus the store brand? In some cases, you can expect to pay 50 percent more for the name brand. Is it any better? By law, generic formula has to meet the same FDA standards as brand name formula.
Mistake 2: Buying Too Much Stuff
Once baby arrives many parents are tempted to buy everything in sight, especially toys and clothes. But with baby growing everyday, there’s a good chance that the designer dress for $50 will only be worn once or twice, before being packed away. And that adorable teddy bear? Chances are baby will be more interested in daddy’s keys or mommy’s slippers. Word of advice: buy the minimum you think your baby needs, then add on from there as needed.
Mistake 3: Not Budgeting for Baby
From the moment mommy learns she’s having a baby, the family expenses will never be the same. Take some time to reevaluate your household budget, looking for ways to trim extra spending, as well as plan for upcoming expenses. Whether it’s paying for day care or diapers, the expenses will quickly add up. Trying to maintain your old financial habits can put a strain on your family’s expenses. The sooner your get your finances in order, the better.