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Transitioning to parenthood

By ElleMartinez ·
Monday, April 4, 2011
Posted: 8 am ET

My husband and I are expecting our first child this summer. We've been working hard to be as prepared as we can. Our schedules have changed as we now have doctor appointments and ultrasounds. We've been reading parenting books and asking family and friends for their experiences and advice.

Besides the lifestyle and emotional adjustments, we realized that there have to be some financial changes for us to keep on track. I want to share some of the preparations we've made in hopes it can help other parents-to-be.

Give yourself time to reach your goals

If we changed everything the moment we found out we're going to be parents, we'd be even more crazy than the usual insanity new parents go through. For many parents, their baby's due date is a timeline to get certain goals met.

However, parents shouldn't panic if they don't make a goal. We have some goals we want to meet before the baby arrives but there are also some goals, such as college savings, that we'll focus on after birth. Having realistic yet challenging goals has worked for us so we are going to continue with that strategy.

Reduce your income needs

We weren't anticipating having a child at this point, but our decision to try to live as a one income family (even though we have two incomes) has been a tremendous help with this good news. We're still paying down our last nonmortgage debt while watching the rest of our monthly expenses.

Having a baby can be a big motivation in keeping expenses reasonable. Because we're both going to be working less for a portion of the year, we want to make sure we plan accordingly. I'm increasing my workload now to build the business up so we won't have to dip into savings as much later on this year.

Saving for the little one(s)

I asked some parents how kids affected their finances and most said that if you're fiscally responsible, kids aren't the money vacuum people think they are. Frugality has allowed them to give their kids some wonderful opportunities without sacrificing their long term finances such as retirement funds. It does take work, but it's doable.

We also have about three months worth of living expenses socked away in our emergency fund. For us, we want to give ourselves a little more buffer in anticipation of the baby so we want to increase our emergency savings to $10,000 by the end of June.

Baby gear

If you're a new parent-to-be, try avoiding baby sites until you've spoken to loved ones about their baby expenses. Talking with family and friends, we saw for ourselves that the 'must-have lists' posted online by stores and baby sites are usually bloated.

A friend pointed out that we should hold off on some purchases until the baby is here. She suggested borrowing some items from friends and seeing if our baby likes them. If they do, great, if not, then we wouldn't have wasted that money. We've also talked to friends about baby clothes and other gently used items that they'd love to get out of their house.

While we will be spending money on our child, we're still going to practice frugality. Children and all their stuff can be as expensive as we can imagine or it can be a reasonable expense that we'll adjust our budget to accommodate.

Life insurance

After we got married and bought a house, we decided we needed term life insurance. Because we have our mortgage and a student loan left, we got a policy that would cover for both debts in the event one of us dies. As we're both in good health, the policies' premiums are relatively low.

But having a child means we have to re-evaluate the coverage we have. We have to sit down and discuss how much we'd like to increase for the coverage. I'm thinking that we may want to have enough money to cover living expenses for a few years.

I would really love to get your personal stories. How many of you have already made the transition to being parents? How have you've prepared financially? What has been the hardest adjustment? What has been the easiest?

Elle Martinez helps families achieve financial freedom by sharing tips for reducing debt and building freelance income over at

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Phil Quinn
April 05, 2011 at 4:06 pm

I can be reached for comments or question on my post

Phil Quinn
April 05, 2011 at 3:44 pm

Being a father of 6 and a grandfather of 9 I spent a great deal of time researching for my kids to help them do a better job of preparing for parenthood than we did.

Being an insurance agent helped me search out the appropriate product in anticipation of becoming a father. As years have gone by more and better options have surfaced to assist my children, now adults with children of their own

The first thing we all seem to think about is insurance and we generally end up with Term because of the cost, that's what we did as well. Last year however, term took a turn for the better for us who are planning a family and future college needs.

So now imagine a term policy with cash accumulation, HUH? It's true, now you can actually get term rates while accumulating cash that may be used for your next (larger of course) home, or unexpected events that seem to come along when you have kids. Reaching way out there even plan a little bit for YOUR selves and your retirement. With this type of product it's all about time and compounding, a small amount of money with these two ingredients will generate cash, cash and more cash. Used wisely you can put the kids through college and keep some for yourself.

I will be happy to direct anyone who "likes the sound of that" to the people who have sacrificed fee's, penalties and commissions to help people get ahead in life. I sure wish they had been around when I was you.

"Accumulate cash now, successful people don't procrastinate".

April 04, 2011 at 4:12 pm

The nice thing is that you get to plan all of this for about 9 months (maybe a bit less). We used this time to start living on a single income right away, even though my wife was still going to work as long as she could. We saved her salary to buy some of the things we were going to need for the baby, and then adjusted our budget to just live on my salary.

And you're right, the little ones aren't as expensive as people make them out to be. Because we wanted to eat healthier (when our daughter started eating our food), we cooked more at home and saved money. And rather than happy hour at the pub, we spent our evenings at home with her, so we probably ended up saving money.

April 04, 2011 at 10:50 am

We have two kids. We did alot of what you listed like life insurance, saving for the baby, and the baby gear. The hardest adjustment was the reduction in spending money and, on the flip side, the doubling of expenses when it comes to food and vacation. The first few years were the hardest because of childcare for two small kids ate up alot of the spending money because both of us work. Now that one is in school, it's getting easier.

Easiest in terms of money would probably be how easy the money is used up :).