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As a parent, you have a lot of responsibilities to your child. You have to make sure they are nurtured, fed, clothed, and brought up to become kind, caring and intelligent human beings. And that’s just to name a few. But, you also have a financial responsibility towards your children. It’s important not to get into bad habits of overspending, buying too much, for your child.
If you want to avoid going broke and ensure that you can give your baby a financially stable future, here are some of the money mistakes you should avoid:
Giving in to Parent Peer Pressure
Your child is going to do just fine without all of those expensive baby products that all of the other moms are telling you are a must have. As long as your child has plenty of food and clothing, a warm place to sleep at night and as much love as you can give, then he or she will be just fine, so don’t feel the need to buy the unnecessary – just because Becky from your mom group recommends it.
Not Budgeting for the Kids
A big mistake lots of parents make is not taking into account, not only the extra costs of a new baby, but the changing, and usually increasing, cost of raising a child as they get older. If you want to stay on top of your finances, you simply must plan for the extra food, clothing, activities, and various other expenses (like college) that you will need to pay for when you have a family.
Not Having an Emergency Fund
If you didn’t have an emergency fund before having kids, then you need to change that now that you do have them, and you need to focus your efforts on building it up as high as you can because emergencies can and will happen. Sure, there are online loans that will tide you over if you’re really in a pickle, but when you have an emergency fund ready and waiting, you can act quickly. You also won’t have to worry about paying it back!
Taking on Too Big of a Mortgage
A lot of parents almost immediately move to a bigger home when they have kids, but this isn’t always the smart thing to do. If you haven’t taken into account things like the impending cost of childcare you’ll soon have to pay, school fees, higher insurance payments and all of the other costs that come with raising a child, then you could find yourself encumbered with a mortgage that is unaffordable.
Not Taking Advantage of Tax Breaks
It’s shocking how many parents either don’t know or don’t care about the tax breaks they can get as parents, but since the Child and Dependent Care tax can save you an average of $3,000 for each one of your kids, alone, it’s something definitely worth looking into. Remember, that’s just one example.
So, do your best to plan wisely. After all, kids are expensive!