Life changes dramatically when you become a parent. While most of us anticipate this shift, its full financial impact is often hard to predict. This is especially true for your finances.

Between the rising cost of quality childcare and other long-term goals like education and property ownership, your choices will inevitably carry more tradeoffs and responsibilities once you have a child.

This is exactly why developing good financial habits is crucial, even before you welcome your child into the world. Good financial planning can empower you to look beyond fleeting pleasures, enabling you to prepare for all of your child’s needs and their future. If you’re stepping into parenthood, this checklist may help you get started on the right foot.

1) Start Building a Credit History

Somewhat unintuitively, parenthood is a good time to build your credit profile, preferably with a credit card that rewards you for everyday purchases. The idea is to use your credit card for groceries, childcare essentials, and other daily needs and to pay off the entire balance each month. This means you can build up your credit score while also avoiding interest and late fees. 

A better credit score will make it easier to become eligible for financial perks that will serve your family, like a personal loan in the Philippines. The funds can be set aside towards financing your child’s tuition or purchasing a larger family home later on.

2) Set a New Realistic Household Budget

With a baby in the picture, your daily expenses will shift dramatically. At first, diapers, formula, doctor’s visits, and baby gear may take up major chunks of your income. Later on, daycare and school fees will start to take over.

In any case, start fresh by mapping out your monthly income against new essential categories. This will ensure you don’t end up taking loans or scrambling when these new bills pile up. Be sure to revisit and revise this list as your family’s needs change.

3) Prepare for Reduced or Variable Income

Leaner months are commonplace in early parenthood since at least one parent must take an extended leave, often requiring the household to live off a single income. This often necessitates major lifestyle adjustments, as you’ll need to focus on your child’s needs and maintain a savings buffer.

4) Open a High-Performance Savings Account

Before your child is born, you should open a new savings account to better organize your growing family’s funds. Ideally, you’ll want a flexible, high-interest savings account that offers low initial deposit requirements, solid returns, and easy online access. An account with an automatic transfer feature is a good pick, given that it’s all too easy to forget to save when you’re busy caring for your child.

5) Set Up (or Rebuild) A Separate Emergency Fund

When unexpected check-ups, hospital stays, and lost income hit, you don’t want to be stuck in a perpetual cycle of borrowing. If possible, set up  another bank account that’s dedicated to covering emergencies. 

Aim for at least three to six months’ worth of living expenses in a separate, dedicated fund. Suffice to say, don’t touch this fund unless there is a real emergency on the horizon.

6) Get Everyone’s Life and Health Insurance Sorted

Before your child is born, review your health insurance for maternity or pediatric coverage and make sure you and your spouse are adequately covered. Later, when you have breathing room, look into an affordable life insurance plan so that your child’s future remains secure should something happen to you.

7) Look for Ways to Reduce or Consolidate Debt

If you’re in debt, you’ll want to keep your obligations under control before your baby comes. Consider consolidating your loans or refinancing them if necessary to reduce your monthly debt payments. While your credit score might take a hit, you might be able to free up funds to pay for more pressing family expenses.

8) Keep Revisiting and Evolving Your Financial Strategy

No parent or financial expert is perfect. You’ll likely make mistakes on one or both fronts, and that’s perfectly okay. As long as you commit to learning from those errors, you can avoid digging yourself into a deeper hole and gain the wisdom to better navigate future challenges in both parenting and personal finance.

In any case, you’ll need all the experience and discernment you can get. As your child grows and your income situation changes, your financial strategies must also evolve. Make a note in your calendar to do a comprehensive review of your budget, insurance, and savings a couple of times a year to make sure you’re on the right track.

Every Choice Adds Up. Start Making Better Choices Today

Becoming a parent can come as a major shock, even to the most prepared. Thankfully, setting up the right systems should empower you to consistently make choices that protect your family while also supporting your own wealth-creation goals. 

You don’t have to do everything perfectly to benefit. Just try a few of the tips above and you will start to provide your growing family the stability and peace of mind all of you deserve.