This is a sponsored conversation written by me on behalf of Northwestern Mutual. The opinions and text are all mine.
I was talking with another mama recently, about finances. She was considering beginning a financial “get your house in order” type plan which my husband and I have done (and still do), because she was concerned about the upcoming cost of a new baby.
She asked me, “So, if you do this plan, is all fun and happiness halted? I’m nervous about the life change.”
No fun? Unhappy? I couldn’t believe what I was hearing. I’ve always been financially responsible, so part of that is just my personality, but I couldn’t imagine that even someone who wasn’t naturally inclined toward saving and budgeting wouldn’t see the benefits.
Is it worth it to create financial security?
I kind of went off on a little tirade. I couldn’t help myself. I’m SO passionate about this topic. It’s so important.
When we were getting out of debt it was super fun to see where we could cut costs and add to our debt payment every month.
When we were saving for our emergency fund, it was fun to sell things or do odd jobs so that we could make that account grow faster.
And financial freedom and security = super happiness. Seriously.
We’ve never had a car payment. We paid for 2 home births (plus doulas for 3 births) completely out of pocket with cash. We send 2 of our kids to private Montessori school. We are saving for a house down payment and so far it looks like when the time is right, we will have at least a 30%+ down payment.
We just came back from a trip we cash-flowed – 5 days in San Diego, Legoland, the aquarium, the Miramar air show… We had no worries about paying for food at restaurants etc. while we were there.
We max out our Roth IRAs every year and save more in a TSP for retirement too.
We also have savings accounts for each kid on autopilot – we aren’t planning to pay for college completely but we will have a nice hunk of cash to help/gift each of them when they’re adults (for first apartment furniture, wedding, help with college, help with a car, whatever we decide).
And we have a savings account for our next car and make monthly payments into it too. Even though both of our vehicles are perfect right now. When one of them dies, we will (as always) buy the next one with cash.
Tell me if that sounds fun and happy to you. It sure does to me, and it’s so worth it!
You CAN get financially secure – even if you’re having a baby soon!
Maybe our level of financial security seems unattainable, especially if you’re just starting out. We’ve been doing this since we got married in 2007 – we’ve had some time to get where we are. (Actually, before we got married, I was so careful with my meager first-year-teacher’s income.)
Maybe you’re drowning in debt, or you’ve never made a budget before. Maybe you’re overwhelmed at the thought of new expenses piling up soon.
Maybe you’re adding to your family, and thinking about the cost of a new baby makes you want to throw up a little, because you just don’t know how you’re going to swing it.
I promise, it can be done. You WILL handle this. No matter what your income level is, or what your experience with finances, budgeting, and saving has been… you CAN do this.
How much do babies cost in the first years?
First, take this Baby Expenses quiz to test your knowledge about how much it costs to take care of a baby in the first years (besides the costs of the pregnancy and birth).
Obviously, the cost of a new baby can vary a LOT, depending on some choices you make. I’ve always stayed home with my kids, and worked from home, so the cost of childcare for us is MUCH lower.
Breastfeeding is much cheaper than formula, but can come with its own expenses too (special breastfeeding bras or clothing, breast pads if you leak, herbs or tinctures if you need them for your supply, lactation cookies and teas if you need or want them, lactation consultant costs if necessary, etc.).
I’ve done cloth diapers in the past, and while it’s a lot cheaper than disposables, there is still a start-up cost.
And there is always, ALWAYS the potential for unexpected costs to pop up. You definitely want to be prepared!
Before we had kids, I worked as a teacher, a teaching assistant, an in-home childcare provider, and a nanny. I also made a tiny bit of money with my blog, and some with my etsy shop and selling at craft shows. While we budgeted for our monthly expenses and non-negotiable savings with my husband’s income, we always used 100% of mine to pay off debt, increase our savings, and save for “extras” that were important enough for us to prioritize.
Now that we have no debt, decent savings, and three kids, we still have a similar financial routine. My husband’s income goes to our monthly costs of living, retirement savings, shorter-term savings (like saving for buying a house, the car savings I mentioned before, things like that), and any travel we may do if there’s “extra.”
I’m still working from home as a blogger. Since my income is highly variable, we can’t count on it the same way we can trust my husband’s. So, I put almost all of it into a special savings account for our kids’ private school tuitions. If that account gets big enough for me to feel comfortable NOT adding to it for a few months, I switch to saving toward our future house (after all these years, we still rent, because it makes sense with our military lifestyle for now).
It’s not always easy to decide what to prioritize. When you’re just starting out, you might have VERY little wiggle-room, too. I remember when my husband and I had a meeting together to decide whether to add unlimited texting to our cell phone plans. You’d think $30 a month per phone wouldn’t be a big deal, but it was. We ended up deciding to do it, but reduced our monthly “allowances” by $30 each to make room for it.
There were times we wanted to go on a date, but didn’t have much money for it… so we cooked and ate dinner at home, then went out for coffee or dessert afterward.
And I definitely recognize that sometimes the problem isn’t budgeting and reducing expenses so much as figuring out a way to increase your income. Taking on odd jobs, babysitting, selling things you no longer use (or buying really nice things at garage sales and “flipping” them for more money), driving for Uber, working seasonal jobs in retail… all of these are ways to increase your income in the short term.
How can I prepare for the cost of a new baby?
Let’s face it – if doing what you’ve been doing (when you know better) hasn’t worked for you in the past, you probably shouldn’t expect to magically succeed on your own this time either. It’s time to choose a plan to prepare for the cost of a new baby!
There are a ton of different financial plans – some with support, and some without – to choose between. Read about them a bit, ask your friends for what they’ve used, and pick one to begin.
You can start by downloading Northwestern Mutual’s Financial Boot Camp for New Parents eBook for free. There’s a ton of great information in it about the cost of a new baby and the costs of raising children, how to get started with a budget, how to plan for immediate expenses, short-term savings, and long-term savings, and more.
There is also contact information in the book for getting in touch with a Northwestern Mutual financial professional if you’d like to create a customized step-by-step plan for reaching your goals.
The bottom line?
YES, it’s worth the work and sacrifices necessary to get your finances in order, especially when you’re growing your family and considering the cost of a new baby.
YES, you can do this, no matter what your income level is or what your situation in life is.
YES, there are free resources out there to help you, and people who will support you all along the way.
YES, in a few years, you could also be saving for retirement, sending your kids to your preferred schools, and cash-flowing trips to Legoland (and that’s without being “loaded,” just responsible) like we are.