As we prepare to welcome our second child into this world, we’d be remiss if we didn’t share how we budget for life’s big moments. Big moments are met with great excitement, but also worry over the financials. Having successfully budgeted for the birth of our children, higher education, and a wedding, today on the blog we are sharing our tips and tricks to enjoy the moments without the stress of finances.
Budgeting for the Birth of a Child
The expectation of a child should not neglect the importance of budgeting for the child’s arrival and beyond. We’ve all heard the phrase “children are expensive”, but how can you prepare for the expenses children bring?
Understand Parental Leave Terms
It’s no secret much of the United States is behind on parental leave benefits, however one must plan for reality. Understand if parental leave brings a reduction in pay. If the parental leave benefit is 70% of the salary, use the pregnancy months to save up the missing 30% multiplied by the amount of pay periods of decreased pay. It’s also important to understand the terms of parental leave. Employees may be required to return to work immediately upon the end of the term or face financial penalties.
Prepare for Childcare Expenses
Will the new child require childcare? The time to prepare for childcare expenses is months before the child arrives. Research childcare options early in the pregnancy. Ensure affordability is considered in the choice. Prior to committing to an option, conduct an affordability analysis and simulate the new expenses in your budget.
Estimate for New Expenses
A new baby will increase expenses such as the grocery bill for formula and diapers, medication budget, and the shopping bill for those rapidly growing babies. Estimate the increase in expenses and add them into the budget months in advance. An objective look ahead allows you to prepare accordingly.
Budgeting for Higher Education
At ELP Budgeting Services, we’ve encountered many people who falsely believe they can’t possibly budget for the astronomical costs of higher education. Time and time again we debunk the misconception with these tips:
Saving Little is Better than Not Saving at All
Let’s say the cost of a bachelor’s degree and associated expenses is $80,000 over 4 years. In combination with grants, any amount saved limits the amount of student loans needed. With the interest charged on student loans, $5,000 saved could really equate to $10,000 less paid back in student loans.
Open a 529
If you are an ELP Budgeting Services subscriber, you know how often we speak of the power of 529 College Savings Accounts. Parents can open back door 529 accounts and begin saving before a child is born! (Ask us how because we did it!) In addition, 529 accounts are not reserved for just children. Anyone pursuing an education can open an account and experience the benefits of compound interest.
Budgeting for a Wedding
They say every girl dreams of her wedding day, but once the ring comes she may face the fear of not having that dream wedding due to affordability. ELP Budgeting Services comes to the rescue with these tips when budgeting for a wedding:
Know how much help you are getting
If you are fortunate to receive financial help towards a wedding, have conversations early on in the planning process. Know good estimates of how much financial help to expect. Use these amounts to either fund the wedding details you couldn’t otherwise have, or to decrease your own financial liability.
Plan for the wedding of your budget, not your dreams
Is it really a dream wedding if you start your marriage in debt? We don’t think so. Plan for a wedding your budget can tolerate, which may not be the wedding you always imagined. This does not mean one can’t have a beautiful dream wedding. It just means a dream wedding within budget is possible. Set an affordable budget and stick to it no matter what the florist says you “must have” as centerpieces to wow your guests. We promise in 10 years no one will be raving about the flowers!
Budgeting Always Wins
We at ELP Budgeting Services scream the power of budgeting because we experience it every day in our personal lives and the lives of our clients. Budgeting (and sticking to it) leads to a life of peace. Aren’t you ready to enjoy life’s big moments without that inside voice saying “but how will I afford this?!” Our team is standing by to help you Earn. Live. Plan.