Oportun: 5 Financial Tips for New Parents

Having children is a wonderful joy couples can experience, but it’s also a significant financial responsibility. Parents can apply common financial success strategies with a few tweaks to help stay on track financially while giving their child a happy and healthy childhood. Here are 5 tips new parents can try to achieve financial success while raising children.

1. Reevaluate the budget

Budgeting is essentially understanding what money comes in and what money goes out, and applying as much control over it as possible. Children can significantly increase ongoing expenses, so the first thing new parents should look at is their budget. Some expenses that may need to be added include:

• Childcare, such as daycare or nanny services
• Daily needs, like food, diapers, wipes, and clothing
• Healthcare, like regular checkups, health insurance, medications, vaccinations, and treatments for childhood illnesses (kids get sick a lot!)
• Equipment, like baby car seats, a crib, toys, and a stroller

At the same time, parents may be able to uncover expenses they no longer need or can do without. For example, many new parents can’t find as much time to watch television and could cancel streaming services to free up more monthly funds.

2. Grow the emergency fund

Emergency funds help cover the financial impacts of car accidents, medical expenses, job losses, and similar unexpected events. With the new responsibility of a child, being prepared for the unexpected becomes so much more important.

Households should generally save three to six months of living expenses. Living expenses go up when a child is born, and so too should savings. Apps and tools can help build savings, like Oportun’s Set & Save, which automates saving in a smart, personalized way that limits the impact on a monthly budget.

3. Refinance and consolidate debt

Refinancing debt involves paying off a single loan with a new, lower-rate loan to save on monthly payments and interest. Consolidating involves paying off several debts, like loans and/or credit cards, all at once using the funds from a new loan, which simplifies repayment and ideally reduces the risk of late fees. If new parents have a lot of debt, they may be able to reduce their ongoing expenses and save time by refinancing or consolidating.

Personal loans are a common way to consolidate and refinance. These loans can offer reasonable interest rates, fixed payments, and simple management. Interested borrowers can find small personal loans at individual institutions or by using online tools that aggregate prequalified offers.

4. Consider life insurance

Life insurance becomes a more crucial consideration once children come along. If one parent passes away, the surviving parent must provide for the increased daily expenses, the expensive future goals like higher education, and will experience an impact on their time. No matter what the split is for bringing in household income, life insurance for both parents can be helpful if tragedy happens.

5. Create or update estate plans

When children are born, one important document to create or update is the last will and testament. This determines how one’s assets are distributed and names a guardian for minor children in case both parents pass. Parents may also want to add a trust to their estate who will manage asset distribution.

Other documents, such as various powers of attorney or HIPAA Authorization, may also be a good idea to establish or freshen—just in case. New parents could work with an estate planning attorney if they have questions or need help creating or updating their estate plan.

Secure a stable financial future

Parenthood brings its financial challenges, but there are many ways parents can continue living comfortably and create a stable financial future for their families. New parents should reevaluate their budget immediately, ideally before their child is born, and then work toward building their emergency fund. Meanwhile, they should refinance and consolidate debts, explore life insurance policies, and create or update their estate plans. Following these strategies can help reduce financial strain and allow families to enjoy parenthood that much more.

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