I’m a millennial and soon I’ll be a millennial parent. In fact, my little girl will be here in approximately 3 weeks, if not sooner. We make up most of our society’s new parents. Studies tell us that millennials are seriously mistaken about the cost of this future expense, specifically about what having a baby will cost.
Millennials have more student debt than any previous generation. They came into adulthood during the United States’ most recent economic recession. This presents unique challenges to the 18 – 34 age group as we get ready to become parents.
Millennials are seriously mistaken about the cost of this future expense
The first-year-cost for raising a baby in a two-parent household with a $40,000 annual income is $21,248.
The first-year-cost for raising a baby in a two-parent household with a $200,000 annual income is $51,985.
49% of millennials think that the expenses that they will incur during the first year of having a baby will be less than $5000! This is why I’m saying that millennials are seriously mistaken about the cost of their future expenses! The good news is that we want to set aside money for post-baby life, we just need to be shown how to do it.
Here are 4 simple solutions for millennials to prepare their budget for a new baby in the mix.
TRACK YOUR SPENDING FOR 3 MONTHS
After your 3-month analysis, you now know where to cut back on your splurge spending. You now need to create solid goals of what you want to accomplish with this money. With this new money you’ve freed up, apply it into different goal objectives like: a year of child care or a college fund.
NEW BABY BUDGET
There are numerous online calculators that help you estimate your new expenses; make use of them. Childcare can be the most expensive item on your new budget so make sure you research all the options. By using these estimates you can create and stick to a new budget when your baby arrives.
REQUEST SENSIBLE GIFTS
People get really excited when they hear a baby is on the way and this leads them to buy all kinds of things for them. Babies outgrow clothes at an exponential rate. Does it really make sense to purchase designer baby shoes or clothing? Instead of having your family spend money on unnecessary things; ask them to buy different sized diapers, or onsies, things that you know your baby will definitely need.