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How to Balance Finances as a New Parent

Thursday, October 19, 2017

Having a baby is exciting. As a new parent, you have read all the books and prepared yourself for every waking moment with your new addition.

Debt help in Vancouver British Columbia

One thing the baby books might forget to mention is your finances. After all, one parent typically takes maternity leave, which means your household income could drop. If that same parent does not return to work or only returns part-time, you might just find yourself in budget distress.

Children will change your existing financial lifestyle – regardless of whether you work or not. Therefore, it is imperative that new parents understand how to properly revamp their finances and save so that they do not find themselves stressing over money when they should be filling their hearts with joy.

Expert Tips for Balancing Finances in British Columbia with a New Addition

Your new baby will add to your monthly expenses, from the cost of diapers, to formula, strollers, car seats, toys, clothing, and all the other supplies they need. While your costs go up and income might go down, you can mitigate the hit you take by considering the following:

  • Eliminate Debts – Reduce your debts as much as possible. With a new child, you have time off work to consider, extra expenses each month, and not a lot of wiggle room in your budget to save money. The more efficient you are at paying off your debts, the easier it will be to tackle other expenses as a new parent.
  • Start a College Savings Plan – If you plan to finance your child’s higher education, now is the time to invest in it. In fact, contributing the maximum amount to a registered education plan to receive the full grant is the best thing you can do.
  • Plan for Daycare – Now is the time to research how much daycare will cost if you intend to return to work after the baby is born. Daycare costs can quickly eat up any surplus income you currently have in the budget; therefore, saving your surplus now to help offset that cost is important.
  • Maximize Contributions – After you have paid your expenses, any surplus you have should be prioritized into your employer retirement-savings program (RRSP). This helps you take advantage of employer contributions, which are critical.
  • Pay Down the Mortgage – If your cash flow has extra to spare, then your next goal should be to pay faster toward your mortgage. That means going for bi-weekly payments instead of monthly, and paying additional amounts toward the principal when possible.
  • Tax-Free Savings – Lastly, take advantage of tax-free savings opportunities that go outside of your employer plans. These help you grow your wealth without increasing your tax burden later.
  • Think of Future Goals – What are your long-term goals? These are what will help drive your plan once your child arrives. If you intend to retire at 65, you must ensure your retirement savings will get you there and keep you comfortable. Also, realize that when the baby is born, your retirement contributions naturally decrease. Therefore, you must plan for how much extra you will need to invest once you balance out the expenses of a new baby.

Getting Out of Debt is Critical for New Parents

Debt can bring you down as a new parent, especially if you find yourself unable to keep up with daily living expenses because of unpaid debts. For debt help in Vancouver, turn to the team at Abakhan & Associates, Inc. With offices across British Columbia, our team is here to help you find a solution based on your unique circumstances. We help you look at all of the options available to you and most importantly, we work hard to help you avoid bankruptcy.

Contact Abakhan & Associates, Inc. today for a debt consultation or bankruptcy analysis. We are a Licensed Insolvency Trustee in Vancouver.  Call us today at 877-308-8877 or contact us online.

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