Having a baby means countless changes in your life, and they can happen very quickly. Diapers. Day care. Days running on little sleep. While it may not be on the top of your parenting list, budgeting for a new baby can help prepare your family for the excitement that’s ahead.
Kelsa Dickey is a financial coach and co-owner of Fiscal Fitness, a financial coaching company based in Phoenix. For her and her husband, budgeting has helped reduce money stress since they had their daughter in 2015.
“I absolutely worry less about finances because we budget our money,” Dickey says. “I find budgeting incredibly liberating.”
How do you prepare financially for a baby so you can worry less about finances as a parent? Here are four tips that expecting parents can use to help figure out their new financial reality and learn how to budget for a baby:
1. Prep for pregnancy expenses
Budgeting for a new baby often starts long before the baby arrives. You may have to account for medical bills, prenatal vitamins and maternity clothes, for example. Budgeting for a new baby can become easier if you account for these new expenses before you even need to make the purchases.
Alli Wittbold, a former teacher and blogger at Mom Smart Not Hard, and her husband, were able to save a significant amount on their medical bills when they had their daughter in 2016. Before they were even pregnant, they thought about ways to save money and researched the maternity coverage on both of their insurance plans. They found the coverage on her husband’s plan was much better than hers. By switching their coverage to her husband’s plan before getting pregnant, they were able to save thousands of dollars in maternity-related medical expenses.
While not all pregnancy expenses can be so well-planned in advance, sit down with your budget and make a list of all the new, common costs you’ll need to account for as you prepare for your family’s newest addition. Talking with other parents can help you get a sense for costs that may creep up higher than expected (for Dickey, it was maternity clothes, including new shoes and compression socks), as well as those not even on your radar.
“You can’t plan for everything, but if you can plan for even 75 percent of what you’ll need, the other 25 percent will be that much easier to tackle.”
2. Save for baby-related costs
For the Dickeys, budgeting for a new baby meant accounting for increased monthly spending on things they’d anticipated, such as diapers, wipes, baby food and day care. But they also encountered plenty of unexpected expenses. For instance, Dickey planned to nurse and found that nursing supplies and support took a big chunk out of their budget.
“Paying for one-on-one help and consulting was not something I anticipated,” she says.
The Wittbolds also encountered unexpected costs when budgeting for a new baby. They didn’t plan for supplies for when their baby got sick. “During our daughter’s first cold, we ran out to buy a humidifier and nasal aspirator,” Wittbold says.
To cope with unexpected expenses related to their daughter, the Dickeys adjusted their budget and began putting a set amount of money into a specific savings account each month. “I highly recommend doing this because you don’t necessarily know what you will or won’t need, so this allows for some flexibility,” Dickey says.
If you’re looking for additional strategies to learn how to budget for a baby, consider starting an emergency fund to help you better budget for a new baby’s unexpected expenses.
“You can’t plan for everything, but if you can plan for even 75 percent of what you’ll need,” Dickey says, “the other 25 percent will be that much easier to tackle.”
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3. Get creative with your purchases
While baby items can be fun to shop for (think cute little onesies), paying full price on everything can make it nearly impossible to budget for a new baby. The Wittbolds were gifted a lot of the things they needed at their baby shower, but they also shopped secondhandâa great tip for those worried about how to budget for a baby. They perused local classifieds and online marketplaces, and they even picked up hand-me-downs from friends with older children.
The Wittbolds also found creative (and fun) ways to save money by pooling resources from their friends. “My husband had a ‘daddy diaper party’ with all of his guy friends. As a gift, each friend brings a box of diapers,” Wittbold says. “We didn’t have to buy diapers for months.”
4. Account for income changes
Whether you intend to take a parental leave from work or have one parent stay at home to care for your child, you may have to figure out how to budget for a baby with less income than you’re used to.
Dickey and her husband own their financial coaching business, and they were worried about loss of income since they don’t work for an employer with maternity or paternity leave benefits. She knew she wanted to take six weeks off after having her daughter, so they started saving for the drop in income as soon as they knew they were pregnant.
“It made it so I didn’t worry and knew I could enjoy that time off with my daughter,” she says.
Wittbold decided to cope with her time off work as a school teacher by enacting a spending freeze once she was no longer earning an income. “For us, this means no spending aside from grocery store essentials, baby essentials like diapers, gas and of course bills,” she says. “To prepare for this, I stocked our freezer with homemade meals that could be dumped in the Crock-Pot or popped in the oven.”
Not long after her daughter was born, Wittbold decided to continue staying at home rather than return to her teaching position. She needed longer-term solutions to account for one less full-time income. After seeking out online opportunities, she found a remote position where she could teach English online. This helped her start earning enough part-time money to make staying at home possible.
“I teach every morning from 5:00 a.m. to 8:00 a.m.,” she says. “This change meant an additional $1,200 for our family every month.” This kind of flexible side hustle that you can maintain while parenting is a great way to bring in additional income if you’re budgeting for a new baby and looking for ways to save money when you have a baby.
“Budgeting has forced us to do things like meal plan, create cleaning schedules and use our time more effectively in order to earn money from home. This all results in less stress and more time with our baby because we are using the time we have more intentionally.”
Sleep soundly (well, eventually) thanks to your budget
While you might not be able to sleep through the night anytime soon, budgeting for a new baby will help give you peace of mind. Knowing you have a plan for expected and unexpected expenses, as well as understanding ways to save money when you have a baby, can allow you to make the most of your time with your family.
“Budgeting has forced us to do things like meal plan, create cleaning schedules and use our time more effectively in order to earn money from home,” Wittbold says. “This all results in less stress and more time with our baby because we are using the time we have more intentionally.”
The post Budgeting for a New Baby? Babyproof Your Budget in 4 Steps appeared first on Discover Bank – Banking Topics Blog.
Working from home has its perks. Thereâs the money saved from skipping the commute, and just think about all of that time you get back by avoiding crowded freeways or public transit during rush hour. As far as workplace attire goes, few employees would trade âwork-from-home casualâ for dress slacks.
But while working from home affords some new freedoms, it also creates new challenges. One of your biggest tasks is to create a productive, ergonomically correct workplace in your home without breaking the bank. If this sounds familiar, youâre probably asking yourself, âHow can I set up a home office on a budget?â
Whether youâve always worked from home as a freelancer or started during the pandemic, these expert tips will help you get started as you design your home office on a budget:
Strive for an ergonomically correct home office
Being home all day creates an unexpected obstacle: pain. Many workers find that transitioning from a well-equipped office to a makeshift setup at home leads to discomfort. Thatâs because many of them go from having a spacious desk, comfortable chair, and monitor and keyboard in their office building to working from a laptop in their living room.
If you suffer from neck pain or eye strain when working from home, you may be feeling the effects of poor ergonomics. Ergonomics, commonly known as the science of work, aims to optimize productivity and health in a workspace.
As a physical therapist with more than 25 years of experience, Karen Loesing, owner of The Ergonomic Expert, knows this issue all too well. Loesingâs company performs ergonomic assessments for businesses and home offices. Over the years, she has seen countless clients suffering from neck, back or other health issues due to poorly designed workspaces. But it doesnât have to be that way, Loesing says.
âHaving an ergonomically correct workstation enhances productivity and generally overall happiness at work.â
There are relatively easy ways to transform an ergonomic nightmare into a well-functioning home office on a budgetâeven if youâre stationed at the kitchen table, she says. And the investment is worth it.
âHaving an ergonomically correct workstation enhances productivity and generally overall happiness at work,â Loesing says. âFor those who are able to designate a certain space in their home where they can work without distractionsâmaybe even a window with a view and the flexibility to work at your own paceâit has been proven this makes for a happier employee.â
Who doesnât want to boost their health, productivity and happiness in one fell swoop?
Find the optimal location for your at-home workspace
When setting up a home office for remote work, location should be your first decision, says design consultant Linda Varone, author of âThe Smarter Home Office.â Depending on your living situation, there may be an obvious answer, such as that spare room youâve always thought could become an office space.
If you donât have a dedicated office, donât despair. While you design your home office on a budget, think creatively about where it can be.
Varone once visited a clientâs home to help reconfigure her workspace. The client was running a business from a table in the hallway. âAt the end of each workday, she had to pack everything up and store it in the closet in the guest room,â Varone says.
But as Varone learned, guests only stayed over two weeks a year, leaving the room empty the rest of the time. It hadnât occurred to the business owner, but turning the guest room into a home office for most of the year was the perfect solution.
âThere are some simple, simple ways that people can rethink their home office without a big investment and make that space really work for them,â Varone says.
In addition to using a guest room, a dining or living room can also function as a home office on a budget.
Establish the ideal setup for your workstation
Once youâve decided on the room, determine the location for your workstation, Varone says. As you plan your home office, consider placing your desk or table near a window, allowing for natural light and an occasional glimpse of nature. Donât face directly outside; instead, aim for a line of sight thatâs perpendicular to the window, Varone says. Thatâs because, even on an overcast day, youâd be looking into too much bright light if youâre facing the window.
âWhatâs happening is your eyes are adjusting back and forth between the bright sunlight that youâre facing and the darker light of your computer screen,â Varone says. âAnd that ends up being really fatiguing for the eye.â
If you live with others, the biggest challenge will be privacy. Try to clearly define the boundaries of your âofficeâ if you can, such as with an area rug, she says. Then ask your roommates or family members not to enter your space while youâre working, apart from an emergency.
If you use a multipurpose space, be sure to tidy everything up at the end of the day, Varone says. Taking the 10 minutes or so to clean up your âofficeâ will reduce clutter. Ultimately, a clutter-free space can reduce your stress and boost your productivity.
âThat also has a benefit of becoming a little ritual and helping you say, âAll right, my workday is over,ââ Varone says. ââNow I can focus on my personal life.ââ
Choose your furniture wisely
Now that youâve found the perfect location for your home office on a budget, focus on finding the perfect work surface. Maybe itâs a traditional desk. Or it could be your dining room table or kitchen counter.
If you do need to buy a desk or chair, donât feel like you need to spend a fortune. Try looking for a used office furniture store or liquidator in your area, Varone recommends. You could even try searching online marketplaces for a gently used model.
When planning a home office and considering your work surface, what matters most is the height.
The average desk is 29 inches high, Loesing says. This will likely accommodate someone whoâs 5â8â, she acknowledges, but for everyone else? It will take some adjusting to make it fit for them.
Thatâs where your chair comes in. Most people donât need a high-end office swivel chair to work comfortably. As long as you can adjust the height of your chair to fit you and your desk, youâll have a comfortable setup.
Itâs important to adjust the height of your chair to achieve a neutral position, Loesing says. If you donât have the instructions from the manufacturer on how to adjust your model, try searching for videos online, she adds.
One more chair takeaway from Loesing?
âIf you canât spend a dime, at least get as comfortable as you can where youâre sitting, and sit all the way back in your chair,â Loesing says. âWhen you donât sit so your back is against the backrest, youâre using your back muscles all day long instead of them being at rest.â
Adjust your furniture and equipment
As you continue planning a home office, youâll likely find that your computer is your most important piece of equipment. But it can also lead to neck strain. Whether itâs a laptop or an external monitor, Loesing says screen placement is key. In fact, she says itâs the single most important feature to addressâas well as the most commonly disregarded one.
While you plan your home office, Loesing recommends keeping the following ergonomic guidelines in mind to help avoid neck strain:
Align your monitor so your eyes are level with the screen. (Thatâs typically about 4â from the top of the monitor.)
Place your feet flat on the floor and your knees at about a 90-degree angle with the ground.
Place your arms at about a 90-degree angle from the writing surface so your shoulders are relaxed.
If you only have a laptop, and no monitor, you still have options for raising your screen to eye-level. âThere are budget-friendly laptop risers on the market,â Loesing says. âIf you donât want to spend any money, you can place books or reams of paper to bring the screen up to eye level.â
When setting up a home office for remote work and thinking about your arm placement, note that Varone is a strong advocate for an external keyboard. If youâre working at a desk that has a keyboard tray built into it, thatâs a great way to keep your arms at about a 90-degree angle, she says. If you donât have a built-in tray, she says you can improvise by placing your keyboard on an inexpensive laptop table situated directly under your desk.
While the exact adjustments will vary depending on your equipment, height and budget, the focus is on acquiring a neutral position or a position where thereâs no strain on anything, Loesing says.
âWith the addition of standing desks, which encourage movement, employees often find they have significantly more energy at the end of the day.â
Stand if it suits you
If youâre intrigued by the idea of a standing desk, youâre not alone. Standing desk sales have soared over the last decade, buoyed by reports of the dangers of too much sitting.
âStatic postures (e.g., sitting all day in front of a computer) present more fatigue than dynamic working,â Loesing says. âWith the addition of standing desks, which encourage movement, employees often find they have significantly more energy at the end of the day.â
You donât have to buy an official standing desk to reap the benefits when planning a home office. âThe least expensive way would be to take a laptop and place it up high on a built-in high counter using a compact wireless keyboard and mouse,â Loesing says.
Even if you donât have a standing deskâmakeshift or otherwiseâyou can still incorporate movement and circulation into your workday. Set a timer to remind you to stand up and stretch every 20 minutes, Loesing suggests.
For an even better boost, combine this with a popular guideline known as the 20-20-20 rule. Every 20 minutes, give your eyes a break by looking out a window at something at least 20 feet away, and do so for at least 20 seconds.
Donât forget the ambience and accessories
Your desk, chair and computer are the major players when youâre setting up a home office for remote work. But there are a few additional items to consider, like lighting, plants and sound.
Your overhead light fixture likely isnât enough, as it will create shadows and can be too weak by the time it reaches your workspace, Varone says. She recommends investing in a table lamp that creates a wider spread of light in your area. Pick one with a translucent shade that will softly diffuse the light and make it easier on your eyes.
As youâre planning your home office, Varone also recommends incorporating a potted plant or flower into your workspace. Not only can it help purify the air and boost your mood, a natural element can contribute to a restful atmosphere.
Working from home means working with home noisesâespecially if youâre in an environment with roommates, a partner or little ones. To keep the noise down, consider noise-canceling headphones for a quieter workspace and clearer meetings. Other budget-friendly options? Try placing a towel under the door to block out noise from other rooms, Loesing says. Consider curtains instead of blinds, since theyâre better at blocking out sound. Even pillows or large cushions can help reduce noise, she adds.
After youâve taken care of the essentials and if you have the space and money, think about adding a reading chair to your home office. You can use this as a space to review documents or do some deep thinking, Varone says. It can be a welcome respite from your desk while keeping you in the office area, she adds.
One last tip? Add a personal touch, whether itâs a framed family photo or a souvenir from your travels. Itâs your home office, after all. Let your personality shine.
Set up a home office for remote work that allows you to thrive
Now that you know how to create a home office on a budget, youâre ready to make a space that works well for you. Whether youâre an experienced remote worker or a newbie, you can apply these expert tips to set up an office thatâs functional and keeps you motivated day in and day out.
Ready to break in your new home office? Keep that motivation going by learning how to increase your earning potential this year.
The post Planning a Home Office? Check Out These Budget-Friendly Tips appeared first on Discover Bank – Banking Topics Blog.
Your utility bills likely make up a significant part of your monthly budget, so itâs important to keep a close eye on them. But while your rent or mortgage stays the same month to month, your utilities donât.
Sweltering summer days and icy winter nights can lead to budget-blowing spikes in your utility bills, and no matter how hard you try to budget and plan, you canât predict the total each month. Or can you?
Budget billing may offer the consistency you crave. Here, personal finance experts describe how budget billing works and explain who may benefit from it, empowering you to answer this question for yourself: Does budget billing save money?
What is budget billing and how does it work?
As you consider this option, your first question might be: What is budget billing? Budget billing is a service offered by some utility companies that provides a set monthly bill for services like gas or electricity.
How does budget billing work? To calculate your monthly budget billing amount, a utility company will look at your past usage, typically over the last year, and average it to determine your monthly charge, says Sara Rathner, financial author and credit cards expert at NerdWallet. This will give you a predictable bill to pay each month, rather than one that fluctuates.
Keep in mind that if you recently moved into your home, the charges used to calculate your budget billing amount may be based on the previous ownersâ or rentersâ usage, says Rathner. Your actual usage may end up being more or less than theirs.
Another point to remember on how budget billing works: While budget billing gives you a steady amount to pay each month, this amount can, and likely will, change over time. Some providers update bill amounts quarterly, some annually. Thereâs no universal timeline for these updates, so be sure to ask your utility provider about its specific process, says Lance Cothern, CPA and founder of personal finance blog Money Manifesto.
These changes are made to capture your actual usage, whether that usage has decreased (a mild summer allowed you to keep the AC off more often) or increased (a brutally cold winter forced you to blast the heat). Typically, you will be notified in advance of the change.
Now that you know how budget billing works, you may be wondering: Could it save me cash?
Does budget billing save money?
âBudget billing won’t save you money; it just evens your bill out over time,â Cothern says.
How does budget billing work if you end up using less energy and overpay? You may be reimbursed for the amount you paid above your actual energy usage, or the amount overpaid will be applied to next year.
âAnyone who sticks to a strict, detailed monthly budget may prefer the predictability of budget billing.â
How does budget billing work if you underpay? Youâll have to pay the extra amount to make up the difference. These payments or credits happen in addition to any adjustments your provider makes to your monthly bill if your usage changes over time, Cothern says.
What are the benefits of budget billing?
Overall, thereâs a fairly straightforward answer to what budget billing is, and the benefits are clear, too. While it doesnât save you money per se, it may allow you to more easily manage your monthly budget.
For example, if you know your monthly electricity bill will be $100, you can account for this expense in your budget and more precisely allocate funds into other expenses or savings.
âAnyone who sticks to a strict, detailed monthly budget may prefer the predictability of budget billing,â Rathner says. âYou know exactly how much your utility bill will be each month and can plan your other spending around it.â
Combine budget billing with autopay and you can set and forget your utility bills, ensuring theyâre paid on time and in full, making money management a lot simpler. This could also help you deal with financial stress.
While budget billing has its pros, it also comes with cons. Does budget billing save you money? To help answer that question, consider the following:
You may face extra fees. Some utility companies charge a fee for budget billing. In Cothernâs view, this negates the benefit since thereâs no reason to pay tacked-on fees for this service. Itâs important to find out whether there are fees before signing up when youâre researching how budget billing works.
You may ignore your utility usage. Budget billing puts your monthly utility charges, as well as your actual usage, out of sight and out of mind. Without the threat of a higher bill or the reward of a lower one based on your energy habits, some people get complacent, Rathner says. They leave lights on or turn up the heat instead of grabbing a blanket. If this sounds like you, budget billing may actually cost you money in the long run.
âAlways keep an eye on your monthly bill even though you pay a level amount for months at a time,â Cothern says. Most utility companies provide your usage information right on your bill.
If you can financially handle the seasonal swings of each bill, budget billing may not be much of a benefit for you, Cothern says. Paying the full amount also means youâre paying attention to the full amount, he says, which may motivate you to reduce your energy consumption. And thatâs where the real opportunity to save money lies.
By considering potential fees and the impact on your energy usage, youâll have a good sense of whether budget billing saves you money in the long run.
Make the most of how budget billing works with this hack
After scrutinizing how budget billing works, the potential downsides have led some financial pros, Cothern among them, to develop a new hack for paying utility bills.
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Instead of signing up for budget billing, open a savings account online specifically for utilities, Cothern suggests. Youâll also want to sign up for a rewards credit card, if you donât have one already.
Next, grab your last 12 months of utility bills, total them up and divide by 12 to get your monthly average. Youâll then want to set up an automatic transfer of that amount from your checking account into the utility savings account each month.
When the utility bill comes, pay it with your rewards credit card and then pay that bill with the money in your savings. You reap the benefits of maintaining a consistent amount coming out of your budget, as well as credit card rewards and any interest earned on that money from your savings account.
Do your homework before signing up for budget billing
After weighing your options and considering your personal budgeting style, you may decide that budget billing is right for you.
If thatâs the case, itâs important to read your utilityâs program rules in detail. Yes, that means digging into the fine print to understand how budget billing works at the specific company, Cothern says, because budget billing is a general term for a wide variety of utility company programs. Budget billing may be called something else, like flat billing or balanced billing, and it may carry different nuances and terms.
Before signing up for budget billing, Rathner suggests calling your provider and asking the following questions:
Are there startup or maintenance fees?
How is the monthly amount calculated? How often is it updated?
What happens if you overpay or underpay?
What happens when you move or end service?
With the answers to these questions, youâll have a better idea of how budget billing works for your provider. Armed with that info, you can determine whether budget billing saves you money and make the call on whether enrolling is right for you.
Whether you opt for budget billing or not, small adjustments to your home can result in major savings on your energy bills. For starters, check out these four ways to save energy by going green.
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