Having kids is anything but cheap. According to the USDA, families can expect to spend an average of $233,610 raising a child born in 2015 through age 17âand that’s not including the cost of college. The cost of raising a child has also increased since your parents were budgeting for kids. Between 2000 and 2010, for example, the cost of having children increased by 40 percent.
If you’ve had your first child, you understandâfrom diapers to day care to future extracurricular activities, you know how it all adds up. You’ve already learned how to adjust your budget for baby number one. How hard can it be repeating the process a second time?
While you may feel like a parenting pro, overlooking tips to prepare financially for a second child could be bad news for your bank account. Fortunately, affording a second child is more than doable with the right planning.
If your family is about to expand, consider these budgeting tips for a second child:
1. Think twice about upsizing
When asking yourself, “Can I afford to have a second child?”, consider whether your current home and car can accommodate your growing family.
Kimberly Palmer, personal finance expert at NerdWallet, says sharing bedrooms can be a major money-saver if you’re considering tips to prepare financially for a second child. Sharing might not be an option, however, if a second child would make an already small space feel even more cramped. Running the numbers through a mortgage affordability calculator can give you an idea of how much a bigger home might cost.
Swapping your current car out for something larger may also be on your mind if traveling with kids means doubling up on car seats and stowing a stroller and diaper bag onboard. But upgrading could mean adding an expensive car payment into your budget.
“Parents should first decide how much they can afford to spend on a car,” Palmer says.
Buying used can help stretch your budget when you’re trying to afford a second childâbut don’t cut corners on cost if it means sacrificing the safety features you want.
Families can expect to spend an average of $233,610 raising a child born in 2015 through age 17âand that’s not including the cost of college.
2. Be frugal about baby gear
It’s tempting to go out and buy all-new items for a second baby, but you may want to resist the urge. Palmer’s tips to prepare financially for a second child include reusing as much as you can from your first child. That might include clothes, furniture, blankets and toys.
Being frugal with family expenses can even extend past your own closet.
“If you live in a neighborhood with many children, you’ll often find other families giving away gently used items for free,” Palmer says. You may also want to scope out consignment shops and thrift stores for baby items, as well as online marketplaces and community forums. But similar to buying a used car, keep safety first when you’re using this budgeting tip for a second child.
“It’s important to check for recalls on items like strollers and cribs,” Palmer says. “You also want to make sure you have an up-to-date car seat that hasn’t been in any vehicle crashes.”
3. Weigh your childcare options
You may already realize how expensive day care can be for just one child, but that doesn’t mean affording a second child will be impossible.
Michael Gerstman, chartered financial consultant and CEO of Gerstman Financial Group, LLC in Fort Lauderdale, Florida, says parents should think about the trade-off between both parents working if it means paying more for daycare. If one parent’s income is going solely toward childcare, for example, it could make more sense for that parent to stay at home.
Even if this budgeting tip for a second child is appealing, you’ll also want to think about whether taking time away from work to care for kids could make it difficult to get ahead later in your career, Palmer adds.
“If you stay home with your child, then you’re also potentially sacrificing future earnings,” she says.
4. Watch out for sneaky expenses
There are two major budgeting tips for a second child that can sometimes be overlooked: review grocery and utility costs.
If you’re buying formula or other grocery items for a newborn, that can quickly add to your grocery budget. That grocery budget may continue to grow as your second child does and transitions to solid food. Having a new baby could also mean bigger utility bills if you’re doing laundry more often or running more air conditioning or heat to accommodate your family spending more time indoors with the little one.
Gerstman recommends using a budgeting app as a tip to prepare financially for a second child because it can help you plan and track your spending. If possible, start tracking expenses before the baby arrives. You can anticipate how these may change once you welcome home baby number two, especially since you’ve already seen how your expenses increased with your first child. Then, compare that estimate to what you’re actually spending after the baby is born to see what may be costing you more (or less) than you thought each month. You can then start reworking your budget to reflect your new reality and help you afford a second child.
5. Prioritize financial goals in your new budget
Most tips to prepare financially for a second child focus on spending, but don’t neglect creating line items for saving in your budget.
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“An emergency fund is essential for a family,” Palmer says. “You want to make sure you can cover your bills even in the event of a job loss or unexpected expense.”
Paying off debt and saving for retirement should also be on your radar. You might even be thinking about starting to save for your children’s college.
Try your best to keep your own future in mind alongside your children’s. While it feels natural to put your children’s needs first, remember that your needs are also your family’sâand taking care of your future means taking care of theirs, too.
“Putting money aside when you’re expecting can help offset the sticker shock that comes with a new member of the family.”
The key to affording a second child
Remember, the earlier you begin planning, the easier affording a second child can be.
“Putting money aside when you’re expecting can help offset the sticker shock that comes with a new member of the family,” Palmer says. Plus, the more you plan ahead, the more time you’ll have to create priceless memories with your growing family.
The post Affording a Second Child: How to Make Your Budget Work appeared first on Discover Bank – Banking Topics Blog.
It’s a nonstop day. The usual. You’re at the grocery store, grabbing a few things for dinner (note to self: hit the ATM on the way out!), then a much-needed coffee at the drive-through (swipe that debit card), before you drop your tween at her first day of basketball practice (remember to bring your checkbook). Phew. And you’re only halfway done.
In the middle of it all, you certainly don’t want the nagging feeling that you can’t access your money at a moment’s notice, that you’re missing spending perks or that you’ll be hit with unnecessary fees. So a good question for you might be, “What’s the best checking account for busy families?”
How about a checking account that matches your lifestyle? Robert Farrington, founder of millennial personal finance site The College Investor and father of two, suggests that banking for busy parents should include an account that is âconducive to an on-the-move life.”
With everything on your plate, you may not realize that as your family’s needs change, the way you manage your money will likely need to change too. The good news is that many financial institutions offer bank accounts for busy families like yours, designed with features aimed at supporting your active lifestyle.
To select the checking account that best serves your needs, Farrington recommends first examining your current patterns. âNotice how you deposit money and how you spend it,” Farrington says. âLook at your banking trends and see where you’re being charged.”
Next, identify the unique features offered by each new checking account you are considering. To help you do that, here are four key things to look for as you narrow down your search:
1. Cash back rewards: More bang for your buck
According to the U.S. Department of Agriculture, it costs about $12,980 a year to raise a child. Even if your kids get their share of hand-me-downs and you don’t buy them everything they want, you’re still spending a lot. The biggest costsâafter housing (29 percent of child-rearing costs)âare food (18 percent) and child care/education (16 percent). None of that even includes birthdays, holidays and so on…
If you’re trying to find the best checking account for busy families, consider that all those purchases could be a little less painful with a checking account that rewards spending, typically in the form of cash back or rewards points.
Ashley Patrick, founder of the blog Budgets Made Easy, loves the idea of a checking account that offers rewards. Patrick, whose blog tells the story of how she paid off $45,000 of debt in 17 months, recommends that budget-conscious families use debit cards for purchases. âIf those purchases were rewarded,” Patrick says, âthat money would multiply.”
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If you’re using a checking account that rewards you for debit card purchases, some of those seemingly endless expenses can actually help you save a bit of extra cash. Discover Cashback Debit, for example, lets you earn 1% cash back on up to $3,000 in debit card purchases each month.1 That means your monthly cash back earnings could yield $360 in total rewards each year. This feature of a bank account for busy families could pay for one night at your favorite family resort!
2. Easy account access: At home or on the run
You’re dropping off one kid, picking up the other, then have to get ready for a fundraiser. You are always on the go, so it’s time to find the best checking account for busy families that’s always right there with you. Patrick suggests opening a checking account with a bank that has a vast network of no-fee ATM locations. For example, Discover offers more than 60,000 no-fee ATMs around the U.S.
âI live out in the country, about 12 to 13 miles from town, so I need an ATM nearby,” Patrick says. âI usually go to town on Fridays or Mondays, get lunch for the kids, go to the store for groceries and get cash. Everything needs to be in one location.”
Besides getting money for day-to-day purchases, a conveniently located ATM is a must for depositing cash. Why make a special trip to visit your local branch when you can make deposits at an ATM that’s at or near a place you already frequent? Banking for busy parents is hard to imagine without this benefit.
âNotice how you deposit money and how you spend it. Look at your banking trends and see where you’re being charged.”
3. Online and mobile features: Save time in spades
In fact, you may not need a brick-and-mortar bank branch at all. Another option to consider is opening a checking account with an online bank.
The best bank account for busy families is one that offers maximum convenience. With an online checking account, all you need is a computer, tablet or smartphone to deposit a check (most online banks have a mobile app that allows you to take a photo of your check to deposit the funds). An online checking account also makes banking for busy parents effortless by allowing them to manage bills and bank statements from a deviceâeither while at home or out and about. Save the paper for your kids’ cute drawings that you tack up on the fridge.
Nermeen Ghneim, blogger at Savvy Dollar and mom of two, says the best checking account for busy families would offer a mobile app.
âI want to be able to access everything a bank can offer through my mobile device,” Ghneim says. âIt saves time, and it’s huge for a parent with a full-time job.”
Here are some of the other online and mobile features that are key if you’re looking for the best checking account for busy families:
Online transfers. Farrington says the ability to transfer money between accounts is especially important. Things come up unexpectedly and you may need to quickly transfer from savings to checking, or move those cash back rewards into a college fund for the kids. If you’re moving your cash back rewards into savings, you may even be able to make that happen automatically. For example, when you enroll in Discover’s Auto Redemption to Savings, we’ll automatically deposit your cash back into a Discover Online Savings Account every month.
Online bill payments. With everything else on your mind, you shouldn’t have to go through a stack of bills every month. The best checking account for busy families would allow you to set up automatic bill payments, so each month’s charges are automatically debited from your checking account.
Balance notifications. You should never be in the middle of a transaction and see those dreaded words: Insufficient Funds. Instead, you want to get a heads-up when your balance is close to zero, so there aren’t any surprises.
Debit card protection. While it’s important to be able to quickly and easily use your debit card, Ghneim says it’s just as important to be able to freeze it. Some banks offer a digital feature that enables you to switch your debit card on and off, so you can instantly freeze your debit card if it’s been misplaced or you want to curb spending.
Connecting to other digital applications. Nowadays, busy families rely on budgeting and spending apps to help manage their finances. A good bank account for busy families would be able to easily sync with those other tools online or via your mobile device so that you can efficiently manage your money and take advantage of the features of each app.
Farrington says that when selecting the best bank account for busy families, a no-fee checking account is a must-have, so it’s worth shopping around until you find one. For example, Discover Cashback Debit has no account-related fees.2 âYou shouldn’t have to pay a fee if you don’t keep a minimum balance,” Farrington says. âParents often don’t have the bandwidth to keep track of whether they’ve made a certain number of transactions.”
If you are getting hit with a checking account fee for any of the items below, you may want to consider a new checking account to make banking for busy parents easier:
Monthly maintenance
In-network ATM withdrawals
Replacement debit card
Standard checks
Online bill pay
Insufficient funds
Stop payment order
Official bank check
If you’re exploring a new bank account for busy families, Ghneim advises to watch out for hidden costs. Even no-fee checking accounts will sometimes hit you with unexpected charges. âThere should be no hidden fees because if a family is living off a budget, it’s very stressful to incur unexpected fees,” Ghneim says. Farrington agrees: âThere are some things that might cost you money, like wire transfers, but you shouldn’t have to pay for most features these days.”
âThere should be no hidden fees because if a family is living off a budget, it’s very stressful to incur unexpected fees.â
Banking for busy parents just got easier
Above all, Farrington says you want to prioritize the features that are most relevant to your family’s needs and lifestyle. If you’re always on the go, you may care most about convenient, no-fee ATMs and mobile check deposits. If your schedule necessitates a lot of out-of-pocket spending, you may want to prioritize debit card cash back rewards.
Keep in mind that when it comes to establishing the best banking for busy parents, you have options. âThere are so many checking accounts being offered now,” Farrington says. As long as you’re aware of the features that are available, you can make an informed decision and choose the account that’s best for you and your family.
1 ATM transactions, the purchase of money orders or other cash equivalents, cash over portions of point-of-sale transactions, Peer-to-Peer (P2P) payments (such as Apple Pay Cash), and loan payments or account funding made with your debit card are not eligible for cash back rewards. In addition, purchases made using third-party payment accounts (services such as Venmo® and PayPal, which also provide P2P payments) may not be eligible for cash back rewards. Apple, the Apple logo and Apple Pay are trademarks of Apple Inc., registered in the U.S. and other countries.
2 Outgoing wire transfers are subject to a service charge. You may be charged a fee by a non-Discover ATM if it is not part of the 60,000+ ATMs in our no-fee network.
The post Banking for Busy Parents: 4 Essential Checking Account Features appeared first on Discover Bank – Banking Topics Blog.
Prepping for a new baby’s arrival might kick your nesting instinct into high gear, as you make sure everything is just right before the big day. One thing to add to your new-baby to-do list is figuring out how to financially prepare for maternity leave if you’ll be taking time away from work.
Lauren Mochizuki, a nurse and budgeting expert at personal finance blog Casa Mochi, took time off from work for the births of both her children. Because she had only partial paid leave each time, she says a budget was critical in making sure money wasn’t a source of stress.
“The purpose of budgeting for maternity leave is to have enough money saved to replace your income for your desired leave time,” Mochizuki says.
But the question “How do I budget for maternity leave?” is a big one. One thing’s for sureâthe answer will be different for everyone, since not everyone’s leave or financial situation is the same. What matters most is taking action early to get a grip on your finances while there’s still time to plan.
Before you get caught up in the new-baby glow, here’s what you need to do to financially prepare for maternity leave:
1. Estimate how long you’ll need your maternity budget to last
To financially prepare for maternity leave, you need to know how long you plan to be away from work without pay.
The Family and Medical Leave Act (FMLA) allows eligible employees up to 12 weeks of job-protected, unpaid leave from work per year for certain family and medical reasons, including for the birth of a child. Some employers may also offer a period of paid leave for new parents.
When estimating how long you’ll need your maternity budget to last, Mochizuki says to consider how much unpaid leave you plan to take based on your personal needs and budget. For example, you could find you’re not able to take the full period offered by FMLA after reviewing your expenses (more on that below) and how much you have in savings.
Even if your employer does offer paid maternity leave, you may decide to extend your time at home by supplementing your paid leave with unpaid time off, Mochizuki says.
Keep in mind that despite all of your budgeting for maternity leave, your health and the health of your baby may also influence how much unpaid time off you take and how long your maternity leave budget needs to stretch.
As you’re financially preparing for maternity leave, make sure your spouse or partner is also considering what benefits may be available to them through their employer. Together you should know what benefits are available for maternity or paternity leave, either paid or unpaid, and how to apply for them as you jointly navigate the budgeting for maternity leave process. You can then decide how to coordinate the amount of time each of you should take and when that leave should begin.
Contact your HR department to learn about your company’s maternity leave policy, how to apply for leave and whether there are any conditions you need to meet to qualify for leave. Ask if you’re able to leverage sick days, vacation days or short-term disability for paid maternity leave.
2. Babyproof your budget
When budgeting for maternity leave, make sure you review your current monthly budget to assess how budgeting for a new baby fits in.
In Mochizuki’s case, she and her husband added a category to save for maternity leave within their existing budget for household expenses (e.g., mortgage, utilities, groceries).
“We treated it as another emergency fund, meaning we had a goal of how much we wanted to save and we kept working and saving until we reached that goal,” Mochizuki says.
As you financially prepare for maternity leave, consider the following questions:
What new expenses need to be added to your budget? Diapers, for instance, can cost a family around $900 per year, according to the National Diaper Bank Network. You may also be spending money on formula, bottles, wipes, clothes and toys for your new one, all of which can increase your monthly budget. And don’t forget the cost of any new products or items that mom will need along the way. Running the numbers with a first-year baby costs calculator can help you accurately estimate your new expenses and help with financial planning for new parents.
Will any of your current spending be reduced while you’re on leave? As you think about the new expenses you’ll need to add when budgeting for maternity leave, don’t forget the ones you may be able to nix. For example, your budget may dip when it comes to commuting costs if you’re not driving or using public transit to get to work every day. If you have room in your budget for meals out or entertainment expenses, those may naturally be cut if you’re eating at home more often and taking it easy with the little one.
3. Tighten up the budgetâthen tighten some more
Once you’ve evaluated your budget, consider whether you can streamline it further as you financially prepare for maternity leave. This can help ease any loss of income associated with taking time off or counter the new expenses you’ve added to your maternity leave budget.
Becky Beach, founder of Mom Beach, a personal finance blog for moms, says that to make her maternity leave budget workâwhich included three months of unpaid leaveâshe and her husband got serious about reducing unnecessary expenses.
Cut existing costs
As you budget for maternity leave, go through your existing budget by each spending category.
“The best tip is to cut costs on things you don’t need, like subscriptions, movie streaming services, new clothes, eating out, date nights, etc.,” Beach says. “That money should be earmarked for your new baby’s food, clothes and diapers.”
Cutting out those discretionary “wants” is an obvious choice, but look more closely at other ways you could save. For example, could you negotiate a better deal on your car insurance or homeowner’s insurance? Can you better plan and prep for meals to save money on food costs? How about reducing your internet service package or refinancing your debt?
Find ways to earn
Something else to consider as you budget for maternity leave is how you could add income back into your budget if all or part of your leave is unpaid and you want to try and close some of the income gap. For example, before your maternity leave starts, you could turn selling unwanted household items into a side hustle you can do while working full time to bring in some extra cash and declutter before baby arrives.
Reduce new costs
As you save for maternity leave, also think about how you could reduce expenses associated with welcoming a new baby. Rather than buying brand-new furniture or clothing, for example, you could buy those things gently used from consignment shops, friends or relatives and online marketplaces. If someone is planning to throw a baby shower on your behalf, you could create a specific wish list of items you’d prefer to receive as gifts in order to offset costs.
4. Set a savings goal and give every dollar a purpose
When Beach and her husband saved for maternity leave, they set out to save $20,000 prior to their baby’s birth. They cut their spending, used coupons and lived frugally to make it happen.
In Beach’s case, they chose $20,000 since that’s what she would have earned over her three-month maternity leave, had she been working. You might use a similar guideline to choose a savings goal. If you’re receiving paid leave, you may strive to save enough to cover your new expenses.
As you make your plan to save for maternity leave, make sure to account for your loss of income and the new expenses in your maternity leave budget. Don’t forget to factor in any savings you already have set aside and plan to use to help you financially prepare for maternity leave.
Once you’ve come up with your savings target, consider dividing your maternity savings into different buckets, or categories, to help ensure the funds last as long as you need them to. This could also make it harder to overspend in any one category.
For instance, when saving for maternity leave, you may leverage buckets like:
“The purpose of budgeting for maternity leave is to have enough money saved to replace your income for your desired leave time.”
Budgeting for maternity leaveâand beyond
Once maternity leave ends, your budget will evolve again as your income changes and new baby-related expenses are introduced. As you prepare to go back to work, review your budget again and factor in any new costs. For example, in-home childcare or daycare may be something you have to account for, along with ongoing healthcare costs for new-baby checkups.
Then, schedule a regular date going forward to review your budget and expenses as your baby grows. You can do this once at the beginning or end of the month or every payday. Take a look at your income and expenses to see what has increased or decreased and what adjustments, if any, you need to make to keep your budget running smoothly.
Budgeting for maternity leave takes a little time and planning, but it’s well worth the effort. Knowing that your finances are in order lets you relax and enjoy making memoriesâinstead of stressing over money.
The post What You Need to Know About Budgeting for Maternity Leave appeared first on Discover Bank – Banking Topics Blog.
, which also provide P2P payments) may not be eligible for cash back rewards. Apple, the Apple logo and Apple Pay are trademarks of Apple Inc., registered in the U.S. and other countries.
