Being a new parent provides a lot of excitement. You are filled with hope for the new little one and want to provide the kind of life they’ll need to succeed as an adult. We often hear that it takes at least $250,000 to raise a child, I don’t believe that’s the case. Rather, it can be done more reasonably. It requires a purposeful mindset, but it can be done.
As I think about our four little ones, I see that nearly every mistake we made as new parents had to do with one thing – finances. I don’t believe we necessarily overspent, at least after our first child, but the biggest mistakes we made were financial in nature.
Buying A House
Our society promotes homeownership as the ultimate in growing wealth. In many instances it is, but in many cases buying a house isn’t a wise financial move. As new parents, we gave into the hype and bought our first house.
We, rather I, had the belief that our first child had to live in a house from day one. It was as if we believed an apartment was inferior, less safe for our child or that she would feel loved more by being in a house. The result? We bought a house with no money down instead of waiting a year or two to build up a sizable down payment to put us in a better financial situation. That’s a mistake we’re still paying for today.
Not Starting to Save Right Away
As a parent, I shudder at the cost of sending our children to college. With the average student loan debt being just over $35,000, I want to do all I can to mitigate that for our children. To make that possible, however, money must be saved. We put off saving for our first child’s college needs for several years.
We likely won’t be able to fund her entire college experience, and believe we allowed that to hold us back. Fast-forward eight years, we have 529 accounts for all of our children and are actively investing in the stock market for them. If you’re in a similar situation, don’t let the amount you’re able to put away hold you back – start as soon as you can.
Thinking Spending Equals Love
I believe this is one of the easiest mistakes new parents make. We believe by spending on our child we’re showing them love. True, you do love on them by providing things they need like a safe car seat, comfortable and safe crib, proper clothing, etc. but anything beyond the essentials does not communicate that you necessarily love them more.
I think back to the first Christmas or two we had with our oldest. We spent the entire amount we budgeted for her and it came out to an overwhelming amount of gifts. Throw in what the grandparents bought and she didn’t know where to start. With a few years, and a few more children under our belt, we’ve learned the amount spent doesn’t show you love them any more or any less. In fact, I think it could be argued you love them more by using teachable moments to show them how to respect money and use it as the tool it is, not to mindlessly spend it.
Being a new parent is one of the best feelings in the world. You will make mistakes so give yourself some passes, but also do what’s best for your family and not someone else’s.