Budgeting is often thought to be a tedious, time-consuming job, but saving money for a new baby at least comes with pleasant anticipation. A baby-friendly budget is not an impossible thing to create, regardless of your income. The difficult part in any budgeting exercise is sticking to that budget while acquiring all the items you will need.

Calculate your current living costs: The initial step in budgeting is to list down all the expenses that make up your costs to live right now, without your baby. Ensure that all expense items are included. The monthly bills you pay regularly are often the easiest place to start: rent or mortgage, car, groceries, power, water, phone, cable, Internet, fuel, membership dues, etc. Once these amounts are written down, start listing expenses on other things. It does not matter how small the expense is: these little items add up. Add up your total outgoings and spendings for a typical month.

Establish your income: You will want to know your total household income. It should be easy to determine all the money going into your bank account. Deduct your expenses from income, and the remainder will be the baby budget. A baby may require about $800 a month or nearly $10,000 in the first year of life. Do you have enough money left over? It is also important to consider differences in income before and after birth. If you have a two-income household, there may be an income loss when the mother has to take time off for the baby. You’ll need to decide on the length of time for that period.

Cut unnecessary expenses: If the baby budget is not enough, look at items that can be eliminated, particularly non-essential spending. A lot of people spend nearly a third of monthly income just for dining out. Saving money on this item will go far.

* Pack a lunch. Cook at home instead of dining out. Make coffee every morning instead of getting it from the coffee shop.

* Fruitful areas for trimming are usually the Internet services, telephone and cable. Downgrade your cable package to a lower-cost package. Does it really matter much if it takes a few minutes longer to get connected online? There could be a $15-$30 difference in monthly fees. If you can reduce the features on these three services down to essential needs, you might save up to $100 a month; that’s $1,200 annually.

* Consider switching to low-gas-mileage cars (but make sure it is child-friendly). Driving a small and more efficient car can save money on fuel, loan repayments, servicing and even your insurance.

* Some baby things should be bought brand-new, such as baby’s crib and car seat. Baby clothes and maternity clothes do not need to be brand-new. People don’t need all the baby gear forever so there are loads of fantastic items in secondhand stores, garage sales and online auctions. Majority of maternity and baby items have been gently used for short periods of time (maybe 3-6 months) and quickly outgrown. There may even be unused items, because new moms often receive an overabundance of them as gifts.

* Be a smart shopper. Go for on-sale products instead of sticking to brand names and favorite products you automatically pick but don’t know exactly why. Many people shop for groceries once a week, buying more than 50 items each time. If less-expensive brands could substitute for half of those items at an average savings of $1 per product, you could save $25 or more each week. This adds up to $1,300 after 52 weeks in a year. The point is for you to start paying attention to prices and key qualities in a product, and not just the brand. This will eventually make the habit of saving money second nature to you.

There are many spending habits you can change. You’ll just have to find out where and how much savings you can generate.

Set up baby’s monthly budget: In the first year of life, you’ll need between $600 and $800 each month for the new baby. You can raise this by saving money over time or revising your budget to make funds available for it every month. You will have to think of essential items the baby will need including expenses before birth (prenatal pills, doctors’ appointments) and after birth. There will also be expenses for delivery and after-birth care. Budgeting some money for health insurance will be desirable; if you do not have health insurance, you will have to plan how to cover these necessary payments.

Start saving money: It would be desirable to start saving money in a high interest savings account even before a child is conceived. You will need a lot of money during pregnancy and the first year of life, and will probably use up most of what you save ahead of that time. But you will find that saving money ahead is also a good way to build up savings for the baby’s future. Placing all your extra money each month in a seperate high interest online savings account helps your money go further by earning interest and can be used for big items, emergencies or towards your childs future such as education.

Your Finances
By Terry Rigg

Which category do you fall in?

I have determined that financially, people fall into one of
three categories.

1. Family 1 has all the money they need for necessities and
more and manage it very well.

2. Family 2 has all the money they need for necessities and
more but live payday to payday with ever increasing debt.

3. Family 3 don’t have enough money for necessities.

The funny thing about the three families above is that they
could have exactly the same income and family size. This is
not to say that special circumstances has nothing to do with
it, but on the average most people live above their means.

Family 1 has established a workable budget. They don’t pay
more than they can afford for housing, transportation,
utilities, etc. They also have money set aside for long and
short term savings. This short term savings provides two
things. First, it makes money available when the car breaks
down, you need a new washer or any number of unexpected
expenses that crop up. Second, it prevents the need to use
credit cards for these items. The savings here could be
hundreds of dollars. Family 1 planned.

Family 2 is still struggling to establish a budget. In many
cases their house payments or rent is much more than they can
afford. They don’t take the time to evaluate the money that
could be saved with little effort. Usually there is no short
term savings, let alone short term. They use credit cards as
if they were cash and pay hundreds of dollars in unnessary
finance charges and penalities. These people find themselves
with financial problems that often leads to bankruptcy. Family
2 either didn’t plan or may not know how the handle their
finances.

Family 3 has given up on a budget. No matter what they do there
isn’t enough money to pay for housing and other necessities.
They struggle to put food on the table. Most don’t qualify for
credit cards, which is a good thing. In some cases this
situation is self inflicted and some are due to circumstances.

What is the answer to these problems?

Family 1 – Leave these people alone unless you plan to ask their
advice.

Family 2 – These are the people that need to seek help and stand
a chance of becoming a family 1 family. The possible solutions
include a debt management company like Consumer Credit Counseling
Service. They need to establish a budget and stick to it. If
their housing and other expenses are too high, then they need to
cut back, even if they have to move. They also need to cut up
the credit cards and think about consolidating. Depending on
how far they are in debt, this could take years.

Family 3 – While their struggle seems useless, there are things
that can be done. First, they need to see to it that everything
is being done to keep expenses down. The electric bill is a
good example. There is federally subsidized housing that only
charges a small fee based on your income. Make sure that they
are receiving all federal and state benefits that they are
entitled. If they are able, they should seek job training or
some other means to make their life a little better.

Which family are you? No matter whether your are family 1, 2
or 3, there is hope. The primary thing that must be done is to
educate everyone that learning to managing their finances is
absolutely for their peace of mind. With the vast amount of
information on the internet providing help, this is possible.

If you are a family 2 or 3 family, “The Complete Budget and Bill
Organizer” http://www.homemoneyhelp.com/BBOonline.html can help.

Too many people, women especially, ignore this area of home management. Their spouse will take care of the finances while they take care of the home. This is all well and good, but it’s important not to keep yourself in the dark. Knowing where you are right now financially is the first step in knowing where you want to be, and how you’re going to get there. Be part of the decision making process – it’s what being partners is all about!So, how do you dive in and get up to speed on family financing?Make A BudgetThe most important first step you can take is to make a budget for yourself. Most people have no idea how much they spend on what each month, and knowing where your money is going is essential.

Write down all your monthly bills: mortgage, car payments, utilities, cell phone, internet, etc. Also keep track of how much you’re spending on groceries and ‘invisible purchases’, like that $3.

95 latte you get every morning. Track your spending for a month and you’re guaranteed to be surprised at where it all goes!Set GoalsAfter you know where your money is going each month, you’ll know how much you have left over for savings and investments. Having very clear goals about what you’re saving for is essential to successful saving.

Instead of just vaguely putting money into a CD or savings account, sit down and look at what you want. Do you want to take the family on a stellar vacation to Aruba next year? Do you want to be able to pay for college when your kids get older? If you know you’re trying to save up so your daughter can go to the school of her choice, it might make you think twice about that latte every morning. Coffee at home tastes just as good!Think Before You BuyMake conscious choices about what you buy on a daily basis. Making a real effort to mull over purchases will not only save you money but will also cut down onn the clutter in your home! Ask yourself if you really need this, does it have a place in your home, and if you’re really going to use it.

Teach Good HabitsDon’t forget about your kids. Teaching your children to handle money responsibly will help them be financially successful adults. Give them an allowance (whether or not to have them earn it is a personal decision) and let them know that once the money is gone, it’s gone.

If they splurge their week’s allowance on video games and then want more the next day to go to the movies, don’t give in! This teaches them to budget their money, and will make them start thinking about their own purchases. If they can learn to ignore our society’s lust for rampant consumerism and make wise choices, they’ll be ten steps ahead of everyone else.

Pay Yourself FirstHaving money automatically deducted from your checking account every two weeks is a great way to make yourself save. If you never really see the money, you’re less likely to miss it. Many banks will do this free of charge, and setting up automatic withdrawals takes only a few minutes. It’s well worth it if it helps you save for your future goals. If you’re wondering how much to withdraw each month, first try 10% of your net income. If that puts too much strain on your finances, drop it down to 8% or even 5%. But never down to 0%!Remember, having goals and knowing what you’re saving for will enable you to chart a clear course for where you’re headed. You can get there with some careful thought and advance planning.