financial mistakes new parents make


My son M was born my last semester of law school. People frequently ask me how I survived being in law school with a new born. It really wasn’t that bad, but to be fair, I don’t have anything else to compare it to! The hardest part for me though was keeping our spending in check. Since Danny was also in dental school, we were living off of student loans which felt like free money at the time (eek.) Since we had access to that money, it was really hard to not spend it on convenience items (like going through the drive thru window). It seems like this past year there’s been a major baby boom in my group of friends, so high time to share these common financial mistakes new parents make (myself included, so I know best 😉 )

Common financial mistakes new parents make. 

Underestimating cost of childcare.

I honestly have no idea what I thought childcare cost before my son was born. But I definitely had no idea it was so expensive. Leaving your baby to go back to work, should you choose to do so, is extremely difficult for tons of reasons, not the least of which is finding someone you can trust to take care of your baby while you’re away. Child care is one of the only things I don’t shop around for the cheapest price, for obvious reasons. It’s definitely something I want to be high quality. That being said, child care can eat up your entire pay check when you are a new parent, especially if you are young and just starting out your career. The average cost of day care in the United States is about $972.00 per month, or $11,664 per year. Expect to pay more like $2000.00 per month in bigger cities. If you want a nanny, you can expect to pay more like $2000-$3000 on average in the U.S. (at least according to Baby Center) OF COURSE you can find better deals than the average, but like I said, this is not an area where you want to sacrifice quality to save money. Some cheaper ideas: see if a family member can watch your child (even for one or two days a week) to offset costs. Ask friends who might be willing to watch your baby for a lower cost. Consider doing a baby swap- have a friend or family member watch your child some days of the week and swap and watch theirs another day (you’ll need a flexible job for this). Think outside the box.

Not being prepared for emergencies.

Another among the financial mistakes that new parents make is not having an emergency fund in place or otherwise being prepared for emergencies. This is likely because new parents are used to being young and healthy. I can’t speak to anyone else’s experience, but I know for me, we have had WAY, WAY more emergencies since M was born than we had in our 6 years or marriage before he came along. Plus, when you have a child who is 100% completely dependent on you for their survival, you need an emergency fund in place in case anything goes wrong. There are so many things that could go wrong in pregnancy, not to mention delivery, and then the ongoing needs or otherwise arising emergencies that could happen.

Dismissing potential loss of income.

Dismissing potential loss of income is another one of the big financial mistakes new parents make. I hadn’t made up my mind before M was born whether I was going to start working right after law school or if I’d wait until he was a little bit older. I just figured things would like of work themselves out. It wasn’t until after he was born, I graduated, and the crushing weight of our student loans presented itself that we both realized we didn’t even have the option of one of us staying home. We HAD to work to make ends meet. And while things did work out for me in the end, I didn’t carefully consider the potential loss of income had we chosen to stay home. (As an aside, I ended up deciding to work out of necessity, but everything worked out really well. I had a really flexible job where I could work a lot from home, or bring my baby with me some days. I also had a friends and family watch my baby on the days he couldn’t be with me, which helped make things easier. Things obviously don’t work out so well in every situation, so it’s best to understand that you may have the complete loss of one income when you decide to have a baby).

Overspending on baby products that promise to make your life easier.

Probably the BIGGEST among the financial mistakes new parents make is overspending on products that they think will make their lives easier. Do you know what a new baby actually needs? Probably less than 5 things. Food, diapers, wipes, and clothes. Maybe a pacifier. Those are true needs. That $800 bouncer? He may or may not like it. The $1000 stroller? He’ll probably cry and make you carry him anyways. 😉 New baby products are fun and help us all get excited about the arrival of our little ones, but don’t get sucked into the hype of thinking you need a bunch of stuff that you just don’t need.

Underestimating the cost of baby products that you DO need. 

In addition to overspending on products that they don’t need, common among the financial mistakes new parents make is that they underestimate the cost of the baby products they DO need, such as diapers and wipes. On overage, you can expect to pay about $0.20 per diaper. The average new born baby uses between 8-10 diapers per day. Expect to be buying diapers for the first 2.5 years (on average). That can really add up! Not to mention wipes, baby formula, etc. While babies don’t have to be as insanely expensive as we sometimes make them out to be, it does cost money to fulfill their basic needs and you’d be wise to be prepared in advance of their arrival. 🙂 [Tip: save money on diapers and other baby products you need by using Ibotta to earn free cash back. You’ll earn $10 just for signing up with this link when you upload your first receipt]

Dismissing life insurance needs. 

Because new parents are usually fairly young, they might overlook their needs for life insurance, especially if both spouses are working. At least we did. When we first talked about whether we needed life insurance, we just thought, well, since both of us having earning capacity (we both work full time) if one of us dies, the other should be fine since we’ll still be able to work and bring in an income. Then one day it occurred to me– what if we BOTH die? The thought of leaving M alone in this world with not a dollar to his name was more than I could handle– so we got life insurance. And the good news is, life insurance is really not that expensive.

Paying for convenience. 

Paying for convenience is the last on the list of common financial mistakes new parents make, but it is certainly not the least. For me, the hands down most expensive part about having a baby was paying for convenience things that I didn’t care about before my baby was born. In that first year, I went through the fast food drive thru window more than I ever had in my entire life. I didn’t really use coupons or bargain hunt. I grabbed whatever I needed, as I needed it, without planning ahead. I bought things online to save me time from going to the store. If there was any path of least resistance, I took it. Balancing law school and a new born was trickier in some ways than I’d imagined. But with better planning, I could have saved us tons of money on diapers, groceries, and other necessities. While being a new parent is certainly a time to give yourself grace and otherwise take it easy on yourself, you can still do a small bit of planning to make sure your new arrival doesn’t completely destroy your budget and finances. [Related: how to create a budget that will actually work for you.]

Having a baby was the best decision of my life but I could have avoided many of these financial mistakes new parents make with just a little preparation beforehand. Do you know someone having a baby soon? Do them a solid by sharing this article with them!

Have you made any of these financial mistakes new parents make? What other things do you wish you could re-do financially when it comes to having children? 

P.S. Are you deeply in debt? I’ve been there. Grab a FREE copy of the Debt Payoff Starter Kit to help you create and crush your financial goals, prioritize your debt so you know what to pay off first to get out of debt FAST so that you can move on with your life (financially).

financial mistakes new parents make


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