This article originally appeared on Money254. Money254 helps consumers and business owners to search, compare and apply for financial products in Kenya.
Having a child brings so much happiness and excitement. It is an overwhelming experience. Becoming a parent will change you and your finances. As you juggle new responsibilities, a new routine, and your career, you could make bad financial decisions. And most of these mistakes are as a result of ignorance.
Once you announce to your circle that you are expecting a baby or have delivered, they all turn into experts. They all start suggesting you do this and avoid that. You buy this and that other thing. Before you know it, you are spending more than you need to, and your finances are in tartar. But most of this pedestrian advice from friends and family is often myths that can expose you to losses and instability. To keep yourself safe, take them with a pinch of salt.
Another way you might end up falling victim to false parenting advice is from the media, Internet forums, and, interestingly, other parents. As a new parent, you need to understand that what worked for one person might not necessarily work for you. This is because your finances are not identical, and times might have changed.
Here are six common myths parents often fall for and what you can do to ensure you don't become a victim.
1. You need to take 10s of parental classes
As a parent, you do not need to pay hefty prices just to be taught how to take care of your baby. Yes, parenting is new to you, and you don't want to get it wrong, and you feel enrolling in different classes could help you. That might be what everybody around you is suggesting. But you should question if they're worth the money and whether there's a way to gain knowledge without dipping into your savings. The ride ahead is more demanding financially.
While knowledge acquisition is essential, it doesn't have to be expensive. They're various more economical routes you can explore. You can read books, talk to other parents, research online, join parenting forums or take an online class which can be cheaper.
You can also just take the most important class, or two, which has been recommended by your doctor. As is always with everything, experts' recommendations add more value to you and prevent you from being a victim of false advice.
2. You need to prioritise your baby's needs over your needs
Your child's needs are paramount; there's no doubt about that. Providing for your child is a duty you need to take seriously, but that doesn't mean you should shelve personal goals. You should find a way to balance everything and ensure you are not prioritising one front alone.
Parents can mistakenly believe that spending on their children and offering them the most expensive education is the best way to guarantee their children's future and theirs. But this can be detrimental for both parties. Shelving personal goals like retirement in the hope that your child will provide for you in the future is a backward plan that will likely backfire.
Ignoring personal goals in favour of your child's needs can prevent you from building equity, planning for your future, or creating ways to generate income in uncertain times. It will also prevent you from accomplishing simple goals like building an emergency fund and long-term goals like paying off debts.
3. There is no hurry to save for education
You must know the common saying, "Education is key to a bright future." To guarantee such a future for your child, you must start saving for it early. From the time they start school throughout college, you need to have a savings plan to cover their education. Education costs today will not be the same ten or more years from now. Rising costs of living and inflation mean you should be ready to pay a lot to give your child quality schooling.
College education being years from when your child is born doesn't necessarily mean it's too soon to start saving. This level of education is the most money-consuming one. A solid savings plan will spare you the trouble of going into debt when the time for your child to start college comes.
Start saving and investing in instruments that will ensure you have enough money to educate your child, even in case of your untimely demise.
4. One of you needs to stay home with the baby
Having a stay-at-home parent can be a practical option for most families. For some, it is not an option. A lot of things need to be considered while weighing the decision of whether one parent should stay home. It is a big decision and therefore needs to be given thought. And why are you opting for that?
Be honest with yourselves as you make this decision. What does your economic situation look like? Before making the decision ensure that you can comfortably live off your partner's income. Whether it will change your way of life or how it will affect your financial goals. Quitting your job might allow you to raise your child well, but it can also expose you to financial risks and instability.
One of the biggest reasons parents opt for this option is to cut childcare costs but often don't explore other options. Before you settle on it, see if a family member can watch your kid or change your working schedule to accommodate your needs without leaving your job.
Your child will grow up and soon not need your care as much; when you reach that stage, you'll want to return to work. Consider how staying at home will affect your career, how long you will be out of work will likely put a dent in your career, and you might find it hard to rejoin the workforce. The gap in your career can lower your employability status, and depending on your field; your skills might be outdated.
Before making such a decision, weigh your childcare options, create new income streams for your family, and understand the long-lasting effects it will have on your career.
5. You need to move to a bigger house
One of the biggest myths new parents often believe is that they need to move to a bigger house after the birth of their child. But housing constitutes a significant portion of your housing budget and increasing it will have cascading impacts on the rest of your finances. A newborn already brings enough expenses; moving to a new space will raise your spending.
The main reasons new parents often find the need to move to a bigger house are unavoidable. Ensure you don't buy too much baby stuff that causes you to run out of space in your home, and instead of hiring a live-in nanny who might need their room, look into other childcare solutions like having a day burg or using estate daycare centres. This will be less costly, and it helps control your spending, helping you save more money towards other goals like homeownership.
6. You must give your best
Naturally, all parents feel that they must give their best when it comes to their children. It's a parental instinct. Does your best have to be expensive? Absolutely not. Designer items and expensive brands do not constitute your best. It is normal to want to give your best, especially with all the excitement of having a newborn. But your child should not cloud your financial judgement.
Do your absolute best to give your child the best but do it within an acceptable term. You achieve this by living within your means, prioritising basic needs, and saving for your kids' education in advance. Additionally, you should create a baby budget that guides how much you spend on your child, especially regarding discrepancies like toys and clothing. Decide how much you want to pay monthly on baby stuff, and stick to your budget.
In your quest to give your child the best, ensure you don't fall for peer pressure and other societal norms that can lead to overspending.
Myths surrounding parenting greatly affect the finances of new parents. You are new to parenthood and are more likely to believe everything you hear and buy anything you think a child needs. But not every piece of advice is practical, and not every practice is standard. You should listen to advice, but before you act or decide, weigh the advantages over the disadvantages, discuss with your partner and avoid making decisions based on emotions.
A financial advisor and expert are best suited to explain the need and importance of being cautious about how you spend your money. Instead of believing the advice and recommendations that may be true or false, talk to an expert. Get their expert advice regarding what is on your mind. Find out their take when it comes to saving for education, being a stay-at-home parent, and creating your newborn budget.