A newborn baby will require a significant amount of planning, worrying and of course, spending. What guidelines and financial products can you take advantage of to clear the mist of expenses and stress?
Everyone of your family and friends will instantly offer their ‘professional’ advice, whether it be your sibling who’s had personal experience or your grandmother’s herbal conconctions and superstitions.
Regardless of the information you receive and your financial situation, there are methods to follow and mindsets to adapt in order to find the right balance between cost and benefit when it comes to raising your newborn. These include:
Cutting Baby Expenses – Tips and Advice
- Why Buy what you can Receive Free?: Baby showers, friends, family and second hand – all instances where you can come across cheap, if not free necessities and accessories. If you’ve ever attended a baby shower for instance, you’ll know first hand that it’s not uncommon the host receives duplicate gifts – not including what she may have already bought herself.
Baby showers are a great way to avoid spending on clothing, gifts and other things yourself.
- Skip the Disposable Diapers: If your baby is a car, diapers are the petrol. You’ll need to fuel your baby regularly, and it won’t be cheap. Instead of dishing out a constant stream of money for disposable, learning how to change and use a cloth diaper could be a wise investment.
- Income Insurance: With unemployment on estimated to rise well into the end of 2010, how secure are you and your partners jobs?
Even if one of you were to lose your job or simply need to take unpaid leave, is that sufficient? Find out more about income protection from Insurance Watch Australia.
- Keep it Simple: Everyone says ‘live within your means’ and ‘don’t spend more than you earn’ but it’s truly easier said than done. It’s much easier for a financially stable person to sit upon their high-horse and preach against those who live in month to month repaying debt. So what does ‘living within your means’ actually involve?
Think reasonably. Don’t spend $80 on baby outfits which will last 3 months if it’s going to result in arguments with your partner over money.
- Planning for the Future is Wise, Within Reason: Concerned parents have an endless range of worries when it comes to planning for the future of their child. “What about owning a ‘family car’?” Why jump into a luxury 4WD when all you need to install in the back seat of your sedan is a baby chair?
Spending for your child doesn’t necessarily have to involve stressfully throwing your money at every base making sure every aspect is covered. For now, it’s a newborn baby – the child, teenager and young adult is still yet to come.
- Step up the Savings Account in your Bucket Budget: If you’re not aware of the ‘bucket budgeting’ concept, read more about it here. In essence it’s the most effective broad-scale strategy for saving income which doesn’t involve a potentially expensive financial planner.
Budgeting for a baby won’t always be static – prepare for emergency expenses you both don’t expect or didn’t prepare for.
Is there any particular credit card I could use suited for baby expenses?
Like any regular credit card decision, on the broadest scale it comes down to two main considerations of how you plan to use your card:
ANZ's Low Rate MasterCard.
- You need time to repay your purchases: The reason you need a credit card is to cover your baby-related purchases now as you have no other immediate funds at hand to access. As time incurs growing interest, ideally you will need a credit card with a low interest rate.
Commonwealth Bank's Awards MasterCard.
- You need a credit card for convenience and can easily repay your purchases: Since you can repay your purchases on time (on a month to month basis, or within the 55 day interest free grace period) you can take full advantage of rewards that reward program credit card can offer.
Commonwealth Bank are currently offering up to 50,000 reward points on their ‘Awards’ card, at a low reward card annual fee of $59. Are you or your partner studying? Get the card in their name and you’ll be eligible for Commonwealth ‘Student Options’ and receive an annual fee waiver.
- Finish it off with a balance transfer: Once you’ve covered your expenses on your credit card, you should opt in for a balance transfer to pay less (or no) interest on your balance. If you’re unfamiliar with balance transfers, read the balance transfer guide.
To some, spending is leisure and excessive purchases for a new baby can be outright exciting for two keen parents. Keeping it simple isn’t rocket science – Take your financial situation into perspective and ask yourself whether you’ll need to keep the money tight or whether you can ‘afford to have fun’.
For more information go to www.creditcardfinder.com.au
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