newparentsdTop 10 money tips for new parents


1. Embrace the hand-me-down
Yes, you want to bring your baby home in something sparkling new. After that, though, think secondhand. Anything – clothing, furniture, bikes – you are handed down is money you won’t have to spend. Plus, keep in mind that even if you give your child something brand-new, he’ll have it broken in within a couple of days.

2. Saving doesn’t have to be a chore
When I was a child, my mother cut corners in lots of ways: Picnics out of the back of the car instead of a trip to McDonalds. Mac and cheese (the good kind with the cheese from the can) every Wednesday night. And I didn’t think they were skimping – I thought they were fun. My sister-in-law has sold her 6-year-old twins on yard sales; the girls think they’re better than Disneyland.

3. Teach your kids the 10 percent rule
Your kids can start learning about money as early as 2 or 3. That’s when you want to start the grocery-cart dialogue about why we’re buying this raisin bran instead of that raisin bran.
But the number-one rule to hammer home from the day your child can talk is the 10 percent rule. If your kids save 10 percent of every dollar they get, from the time they’re babies until the time they stop working, they’ll have plenty to retire on.

4. Show your kids that needs and wants are two different things
Living by this rule when your kids are younger will help you to get through the first few years of parenting without making the common error of spending money you really don’t have on things you could truly live without. (You’ll figure out, for instance, that your kids can jump right from the crib to the big boy bed – they don’t need the toddler size. Even swing sets, if they exist in a nearby park, aren’t a backyard must.) Even better, if you model this rule for your kids, they’ll grow up knowing the difference themselves.
And when their chorus of “I want” gets out of hand, start an allowance and tell them to buy what they want with their own money. They’ll quickly realize money is a limited resource and they, too, will learn to prioritize.

5. Save in the fat times to help in the lean
There are the years you get a bonus, nothing in the house breaks, and your car is still running fine. And then there are the other years. It’s key to take advantage of the flush years to save more money, rather than spending every dollar you make. You’ll be glad you did when the financial tide turns against you.

6. Ditch debt for love
Here’s what the research shows: Recently married couples who accumulate debt (not mortgage debt, necessarily, but credit card debt) fight more often about money. The more often you fight about money, the more likely you are to divorce.
On the flip side, recently married couples who accumulate assets have stronger, more stable unions. Having a baby is stressful enough. You don’t need finances to stress you out further. The family that saves together, stays together.

7. Take a fresh look at your benefits
If you’re married and both you and your spouse have health insurance, take the time to look over the policies to see which provides the best coverage and value for your child. When you look at the details, you may find it makes sense to cover the entire family under one parent’s plan and ditch the other. Or for your spouse to stay on his plan while you and the kids are on yours.
If you don’t have health insurance, each state has a program that provides free or low-cost health insurance for children. The rules vary by state, but you can find out more at

8. Make a will. Just do it
Quite frankly, I’m horrified that 60 percent of adult Americans don’t have wills. Those numbers include an awful lot of new parents, who risk subjecting their kids to a nasty guardianship proceeding if something happens to them simultaneously. To me, it’s unconscionable.
I know the reason many people won’t come to the plate. It’s not the fear of facing the possibility of your own death – it’s the fear of getting the cold shoulder because you named your sister the guardian rather than your spouse’s brother.
But you can choose a guardian without starting World War III. Just pick one and ask that person if they’ll do it. There’s no need to discuss the issue with anyone else.

9. Get your other paperwork in order
Once you have a child, you not only need a will and a guardian, you need a living will (which tells a doctor whether or not you’d want life support), a healthcare proxy (which allows someone else – generally a spouse – to make medical decisions for you), and a durable power of attorney for finances (which allows someone else – again, generally a spouse – to make financial ones).
It’s not that having a child changes your need for these documents. You should have had them anyway. It’s that life is now more complicated. Not having them, should you need them, will be an incredible hassle for your spouse. So do the work now and rest easy.

10. Look into life insurance
If it would be difficult for your partner to raise your child without your income, you need insurance on your life. The same is true in reverse: If it would be difficult for you to raise your child without your partner’s income, you need insurance on your spouse’s life.

For most people, I’d suggest a term insurance policy, which is a death benefit without an investment account attached. It’s far cheaper than permanent insurance (which has a cash value). I recommend a 20- or 30-year level-premium term policy that’s convertible to permanent insurance in the future. With one physical, you can lock in your premiums for the next two or three decades.