Ways New Parents Can Save
“New parents have a lot to focus on, including finances. Florence Bank can help with planning for your future in all areas including retirement, the purchase of your first house, college education, and family vacations. It’s easy to get overwhelmed by all of the choices you need to make; we’re here to assist you and have all the products and services to meet your needs!”
- Beverly Beaulieu, Senior Vice President / Retail Banking Director
Becoming a parent is one of the biggest, most life-changing events. It is both thrilling and challenging, especially when you think about the cost of raising kids these days. Remember, we’re here for you as you plan for their future - and yours!
Establishing a savings plan and opening a savings account before your first child arrives is very important. Knowing it’s already in place will help you stay focused and committed to your savings goals to ensure a fulfilling future for you and your family.
Add to Your “Buckets” List:
If you’ve already adopted the “saving in buckets” style of saving, you’re on the right path. This simply means that you create categories for each of your savings goals and allocate a specific amount of money to go toward each one on a regular basis. This allows you to set short-term, mid-term, and long-term goals, and helps you stay focused and organized.
With this plan in place, it’s easy to add more buckets to your list to prepare for the arrival of your first child. A new baby brings a myriad of new expenses including baby food, childcare, clothing, diapers, and medical visits. With our EZ$ave Account, new parents can automatically have funds deposited into each of these buckets to ensure that they stick to their savings plan.
Save for Your Family’s “Nest”:
If you haven't already purchased a home, buying one before starting a family may be the next step. It’s not only a smart investment, it’s also the place where you will raise your kids and make memories. To plan for this purchase, create your “home-buying bucket” and start saving from every paycheck for a down payment. Determine how much you need to set aside per paycheck, then commit to that amount. Our Statement Savings Account makes saving for a home easy. All it takes is a $10 minimum opening deposit to get started and with online banking and a competitive interest rate, your money will add up in no time!
Unpaid Parental Leave? Create a “Support Bucket”:
Not everyone has three months’ paid time off when they have a child. If you are in this situation, prepare ahead of time for your departure from work and you may not need to pinch pennies once the baby arrives. Determine how much money you will need on a weekly basis, based on your normal salary. Start setting aside as much as you can to create a cushion for the weeks when you will not receive a paycheck. Or, if you return to work sooner than anticipated and need childcare, this bucket is also ideal for allocating funds for daycare.
Budget for “Extras”:
Many parents need two incomes in order to support a household, so setting aside a bucket for daycare just makes sense. Another important expense to consider is your kids’ future extra-curricular activities, such as sports, music lessons, and more. Supplies for classes and sports gear can add up, so establish an “extra-curricular” bucket as soon as possible! And of course, family vacations are a huge part of raising kids, so start saving now so you can enjoy a yearly vacation. Our Club Account is a great tool for one-time annual expenses.
Saving for Education:
Once you’ve established all of your buckets, it makes sense to consider a college fund.
1. First, don’t panic! There are plenty of options, such as special savings plans and financial aid packages. In fact, saving too far in advance for college tuition could negatively impact your kids’ chance of getting sufficient financial aid.
2. Consider setting up a 529 plan, which is a tax-advantaged savings plan, designed to encourage saving for future education costs. With flexible funding options, this is a great plan for grandparents and other relatives to contribute to at birthdays and holidays instead of traditional gifts.
3. Teach your kids to start saving at a young age toward their own education. By setting aside allowance and money from babysitting or part-time jobs as they get older, they could save several thousand dollars. They’ll also appreciate the opportunity to attend college that much more!
We know saving as first-time parents can sometimes feel challenging and overwhelming, but we’re here to help you set your goals, create buckets, and take control of your financial future. Don’t forget to talk to the seasoned parents in your life and ask them what their buckets were as new parents. And remember - every little bit you save now will ultimately benefit your family’s goals, whether short-term, mid-term, or long-term.
The most important piece of advice is to just get started. We look forward to speaking with you about your savings goals!