Having a Baby Changes What?
This is a guest post from my friend Kacie at Sense to Save. Be sure to stop by her blog and say hi!
It’s true that having a baby will impact your finances. Naturally, you’ll have to budget for diapers, gear, clothing, college and all else that comes with having a child. But surprisingly, having a baby can have a positive impact on your finances. My son is just five months old, and his mere presence has helped us save money in a variety of ways.
1. Our entertainment spending is more purposeful. In these early months, we haven’t gone out to eat in a ‘fancy’ restaurant, gone to movies or enjoyed expensive entertainment. Instead, we visit baby-friendly cheaper restaurants and venues or just plain stay home. Our entertainment spending has gone down as a result. As he gets older, we’ll seek frugal forms of entertainment and save the expensive restaurants for special occasions.
2. We had extra motivation in becoming debt-free. We reasoned that the sooner we were out of debt, the sooner we’d be able to increase our retirement contributions, save for a house, and save for our son’s college education. In addition, being in debt, living on one income and having a baby was stressful. Kicking our debt to the curb helps me sleep better at night (at least until my baby wakes me up!).
3. One final bonus: The child tax credits have reduced our federal tax obligation by at least $1,300 for 2008 (thanks to the stimulus package of the same year). Each year until our son reaches adulthood, we’ll be able to claim him on our taxes and have a lighter tax load.