Starting a family is both exciting and nerve-wracking. Not only do you have the responsibilities of parenthood to navigate, but you also have to manage money in a completely different way. Even with health insurance, the cost of having and raising a baby from newborn to toddler costs tens of thousands of dollars. Setting a budget as part of your personal banking routine is key in making sure you’re prepared. Here’s what you need to know to get started.
Budgeting Doesn’t Have to Change With Your Expenses
If you have a functioning budget method already, it doesn’t need to change just because your income and expenses do after you have a child. Continue doing what you’ve been doing but make changes for the amount of money you have coming in each month. If you don’t have an existing budget in place, you’ll need to find a method that works for you. A good tactic is to break your monthly income into categories.
Look at the fixed expenses you have each month. These include rent or mortgage payments, car insurance, cell phone bills, and utility bills. Ideally, you’ll want to cover these expenses with about 50 percent of your income. The fluctuating expenses like clothing, dinners out, new appliances, and other such surprise expenses should be covered by no more than 30 percent of your monthly income. The remaining 20 percent should then be put into savings for everything from college funds to vacation planning. Your personal banking expert can set up a savings account to help.
Prepare for the Unexpected
As with any budget, making sure you’re prepared for the unexpected is always a good idea, but when you have a baby, it’s even more important. You never know when they’re going to get sick or require an entirely new set of clothes because they suddenly outgrew all of the outfits in the dresser. To this end, your budget may need to be flexible at times. Working with an experienced personal banking professional will help you figure out where your money is best spent and may help you develop a plan to maximize your savings.
Getting your finances ready for a baby doesn’t have to be hard. Let the experienced personal banking team at Magnolia Bank in Hodgenville, KY, help you get your budget ready. Their dedicated staff will help with everything from establishing savings accounts to help you make the most of your savings to starting college funds for your child. Learn more about their services online and call (270) 358-3183 for more information.