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Budgeting for baby

May 05, 2010

There’s more to raising a child than memorable pictures and unforgettable moments. Diapers, a crib, clothing, a car seat, stroller – they are only a handful of the items you’ll have to purchase as a parent. But that’s not all. As children grow, so do their needs — from birthday parties, to clothes, to snacks, to a college education.

Fortunately, there are steps you can take to prepare for your family’s new addition and better manage your finances. Here’s how:

Take a good look at your current expenses. Determine where you can cut back or reduce. For instance, you might want to try eliminating magazine subscriptions, enjoying home-cooked meals, or car-pooling to work. Then reallocate some of the money you saved to baby expenses such as the purchase of a crib or stroller.

Try it on for size. Once you’ve tweaked your finances to accommodate an addition to your family, try living on your new budget before your child is born. A practice run will give you time to grow accustomed to your new spending habits and adjust accordingly.

Look for alternatives. It might be nice to buy that state-of-the-art stroller, but your sister's slightly used stroller might be just as suitable. Establish priorities, so you can spend your money on what really matters to you.

Make your own baby food. Marketers may have you believe that your baby should be eating only the finest store-bought items, but low-cost appliances such as a vegetable steamer and a small food processor can help you create some of the healthiest baby foods at a fraction of the cost of store-bought items.

Start saving for their education. It’s never too early to start an education savings plan for your child. By arranging preauthorized automatic contributions to a savings plan of your choice, you can gradually build up a fund to help your child attend post-secondary school.

Having a baby brings much joy – and a whole new set of financial responsibilities. But by taking the right budgetary steps today, you can ensure that any sleep you lose is over late-night feedings and not your finances.