Financial Literacy for Everyone
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Budgeting for Parents

Divorce and Home Ownership

When your baby is born, your financial picture changes drastically. Now it's more important than ever to create, maintain and stick to a budget. You now have someone depending on you to keep the family financial matters in order. A well-thought-out budget will be your most valuable tool in managing the family money.

If you already have a budget, you'll need to revise it to fit your new, expanded family. If you don't have a budget, create one right now. This information will be still be here when you're done. Begin by downloading this budget worksheet.

Don't throw away your old budget. You can use it as a starting point for a new budget. Go through each of your expenses to see if they will change with your new baby. For example, your rent or mortgage will probably stay the same. But electric bills might increase if one person is planning to stay at home every day.

Add all the extra costs of raising a child into your budget. Another parent can help you identify what extra expenses might come up on a regular basis and what you can expect to spend on them.

One Income versus Two
One of the hardest decisions for new parents is whether to have one parent stay at home full-time. As much as we wish it wasn't the case, this decision is often made based on financial considerations rather than emotional and developmental considerations. Here are some questions that might help guide your decision:

  • Are both jobs paying off? A job is more than just income - it also includes expenses. There's gas and/or other expenses related to transportation. You may eat out much more when working. You will need to pay for childcare while you are at work as well. Add up all of these work-related expenses to figure out how much you would really lose by staying home. It may not be as big a loss as you thought.
  • Can you afford not to work? Subtract your income and work-related expenses from your budget. If that produces a deficit, see if you can cut any expenses but keep your savings as high as possible.
  • What are the emotional costs? Some parents can't wait to get back to work after maternity or paternity leave. As beautiful and enjoyable as the parent-child relationship is, it can get stifling. Parents often yearn for the company and conversation of another adult, the satisfaction of working and the structure of a regular day at the office. If you decide to be a stay-at-home parent, make sure you receive the stimulation you need by getting out of the house once in a while, spending time with friends, or arranging a trusted babysitter so that you can spend some time taking care of only yourself.

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