5 of the Worst New Parent Financial Mistakes to Watch Out For
New parent financial mistakes are common, and you should never feel bad when making them. Sure, there are books you can read about being a parent, but they are usually generalised and vague. Most don’t take into account the personal and specific issues that can hit new parents hard in countries like Britain, where costs are skyrocketing all the time. So, from ignoring long-term security to not getting life insurance, here are some of the worst things to look out for.
Not Creating a Will or Guardianship
It’s never an easy thing to think about, but what will happen to your child if you aren’t around anymore? Illness, or something worse, can separate you from your babies, and you need peace of mind that they will be taken care of in the event this happens. You can arrange a will and guardianship with family lawyers to improve the chances that your children will live with family members or friends. If not, the state will usually take them into the care system.
Ignoring Long-Term Security
This is one of the more challenging parts of being a parent when you don’t have a lot of spare money, if any at all. For the most part, new parents live from paycheck to paycheck and use what little they have on short-term needs such as food, rent and energy. However, there are some long-term needs that can enrich your baby’s life and your own. This includes your child’s wedding or college fund, but also your retirement plans and lifestyle when they leave home.
Mistakes with Budgeting
A recent UK survey found that over 50% of new parents are struggling to even feed their babies. Of course, just living in the UK is hard for most people these days, with food, energy and childcare costs out of control. This makes it all the more essential that you be financially smart when living on your own with a child to take care of. Budgeting based on needs rather than wants can help you get through the toughest times, such as winter, when you need heating.
Foregoing Life Insurance Needs
The loss of a parent, or worse, both, can be devastating to a family. Without enough income, times can get really hard, and sacrifices will need to be made. Childcare becomes almost impossible, day-to-day living gets even harder, and relationships can suffer. However, life insurance can be a lifeline that will help you get through financially when something bad happens. You don’t need the most expensive one, as even a small policy can be a major help.
Accepting Poor Work Flexibility
Sometimes, you can be so grateful for just having a job that you will put up with unfair practices at work. For single mothers, this can be a nightmare, especially when your employer is unwilling to allow even the slightest flexibility. When you need to get the kids to school on time but also get to work, every morning becomes a massive challenge. And what about maternity leave? You don’t have to accept the lowest terms, and you have the right to challenge and negotiate.
Not having a will drawn up or not naming a legal guardian in case of a tragedy can be one of the worst new-parent financial mistakes you can make. Of course, it also helps if you have a budget to stretch your cash further, and you don’t have to accept unfair terms from your employer.
This is a collaborative post.
