3 Financial Mistakes New Parents Make — and How to Avoid Them

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Parents commonly fall victim to certain blunders. Read on for three you’ll want to avoid. [[{“value”:”

Becoming a parent is a life-changing experience. And while there are ups and downs to contend with, many parents find raising a child to be emotionally rewarding.

But let’s face it — bringing a child into the world has the potential to upend your budget and finances in a big way. To minimize that hit, do your best to avoid these big mistakes.

1. Buying everything new

There’s a lot of gear you might need to get your hands on as a new parent. But that doesn’t mean every single item you bring home has to be brand new. If you can buy a secondhand crib or stroller, why not save the money?

Not only might you be able to snag a discount at a secondhand store, but you can also post on your town’s social media page to see if any local parents have items to sell. Some might even be willing to give you things they don’t need anymore at no cost.

That said, the one thing you want to be careful about getting secondhand is a car seat. Car seats tend to have short expiration dates, and you don’t want one that’s been in an accident. Even if it’s intact, it may have hidden damage. That said, if a friend of yours offers up a car seat their child just grew out of for free, and it’s not expired or damaged, then there’s no reason not to take that offer.

2. Not securing child care early enough

Care.com puts the average weekly cost of infant daycare at $321 in 2023. But you might end up spending more than that if you don’t secure child care early on.

Since there are strict caregiver-to-infant ratios that generally need to be upheld at licensed daycare centers, slots tend to fill up quickly. If you wait too long to secure a spot, you may get shut out of the more affordable daycare centers in your town, leaving you no choice but to go with a more expensive one.

How early do you need to secure child care? It depends where you live and what demand looks like. But it’s not unusual to have to put down a deposit for infant care before that infant is even born.

3. Not saving for college early on

You might think that it’s silly to start saving for college when your child isn’t even capable of holding up their own head. But if your child goes directly from high school to college, that gives you roughly an 18-year window to build up an education fund. And if you wait until your child reaches elementary school to start saving for college, you might end up falling short.

Let’s say you start putting aside $200 a month for college when your child is 8 years old, and that your investments generate an average annual 10% return, which is in line with the stock market’s average over the past 50 years. That takes you to about $38,250.

But U.S. News puts the average cost of tuition and fees for a public in-state college at $10,662 a year. That’s $42,648 for four years of studies without accounting for room and board. It also assumes your child stays in state or doesn’t choose a private school.

On the other hand, if you start saving $200 a month for college when your child is first born and snag that same 10% in your portfolio, by age 18, you’ll have a little over $109,400. That might easily cover an in-state education or most of an out-of-state education (the average annual cost there is $23,630 for tuition and fees).

As a new parent, you may not get everything right. And that’s totally okay. But do try your best to avoid these financial blunders and the financial stress they might cause you.

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