Financial self-care is forming habits to achieve financial goals and learning how to save money. If you are a new mom, you can exercise financial self-care by putting away money for savings every month, developing a budget, and sticking to a debt- management strategy.
As a new parent, you always need to be financially aware of what is happening with your money. New moms are under a lot of pressure to manage their cash flow effectively while also ensuring that their kid’s requirements are adequately met.
The majority of a new mom’s time and energy is devoted to caring for the infant’s physical needs. However, you also need to make some financial adjustments in the future to accommodate your growing family. This is the time when focusing on the concept of financial self-care becomes essential.
Why Financial Self-Care is Necessary for New Moms
Self-care is mainly defined as any activity done to improve one’s mental, emotional, or physical well-being. It’s as simple as devoting time to something beneficial to your well-being. Self-care includes:
- Getting enough sleep.
- Eating a healthy diet rich in fresh fruits and vegetables.
- Exercising regularly.
- Maintaining solid relationships.
- Receiving excellent medical treatment.
However, one aspect of self-care that is frequently overlooked is finances.
Believe it or not, including financial self-care into your daily routine can significantly impact your overall well-being and happiness. Consider what happens when you put your physical, emotional, or mental health on the back burner. Doing the same with your finances can have similar effects.
According to a LendingClub report, people with huge credit card debt are more likely to feel socially isolated and dissatisfied with their personal lives.
Things begin to change when you analyze your finances. Prioritizing your finances gives you a healthy money perspective. Knowing you’re taking care of your financial future, and that of your loved ones, can make you feel better. You regain control of your finances by setting and pursuing money goals that are important to you. You have more confidence in your ability to have a satisfying and balanced life.
With that positive approach in mind, here’s some advice on how new moms can take care of their finances and develop wealth.
1. Create a solid and realistic budget.
If you focus on making a reasonable budget and keeping track of your expenses, you’ll be able to better manage your money.
This is the first step toward financial self-care. However, you should also remember that you must establish your budget by carefully calculating your monthly income.
To cover the initial cost of a newborn, I would suggest raising your monthly budget by 10% for the first year. With your first kid, the rise in your budget is necessary, especially if relatives and friends cannot help with the cost of some expensive baby products.
For example, buying baby items from a high-end retailer can easily cost thousands of dollars. Swings, cribs, changing stations, car seats, and baby toys are large, one-time purchases that may cost you a huge amount of money.
2. Start saving in a savings account.
According to financial experts, between 70% to 80% of Americans have lived paycheck to paycheck. To avoid this, you should have a savings account with at least six months of funds.
It’s essential to evaluate your current saving and spending patterns before putting a set amount of money into a dedicated savings account each month. Then, when it comes to opening a new savings account for your kid, you’ll know how much to put in each month without jeopardizing your overall financial strategy.
Building up to six months of savings may be a difficult challenge. Personal finance apps (like Mint, YNAB, Stash, Digit, Simplifi, PocketGuard, Zeta, Clarity Money, Prism, Spendee, and Honeydue) and other technology can help you incorporate more convenient financial management strategies into your daily life.
3. Manage and pay off your debts.
If you don’t take care of your finances, you’ll end up with a lot of debt. Debt causes tension, which can disrupt your family life.
So, please make it a part of your financial self-care plan to proactively pay off all of your debts and avoid taking on any new debt in the future. If you have taken out one or more debts, you may consider paying them off through various methods.
a) DIY debt repayment
As a new mom, a good household budget plan may cut off extra spending and save a decent amount of money every month. Using that money, you may pay off your debts on your own.
You may use DIY debt repayments methods such as the debt snowball or debt avalanche.
With the debt snowball method, you will focus on paying as much as possible each month to the lowest debt balance you have. This way, you may pay off your debts faster.
With the debt avalanche method, you’ll focus on paying the debt balance or account with the highest interest rate. This way, you can pay off high-interest debts faster and save more on interest payments.
b) Debt consolidation
If you are juggling multiple debts and monthly bills, a debt consolidation will be appropriate for you. You can consolidate your multiple debts into a single monthly payment. Your single monthly payment will be cheaper than all the previous payments combined in a month. Thanks to the debt consolidation, you will also be able to reduce your interest rates. The best thing about this option is your credit score will be unharmed.
c) Debt settlement
You can negotiate with your creditors and settle your debts at a lower amount through a debt settlement. The creditor will ask you to pay off the debt through a lump sum. The creditor will forgive a portion of the debt as the final part of the debt settlement process.
The advantage of using a debt settlement is that you can achieve debt relief by saving as much as 40% to 50% of your total debts. Once your debt gets settled, you will no longer have to worry about making any monthly payments, as well as late fees and penalties.
If you have a huge amount of debt that you can’t pay off, you may choose a debt settlement program. This prevents unpaid balances and reduces your risk of being sued by creditors later. But, your credit score may take a big hit after settlement.
4. Plan for retirement savings.
Start making the necessary preparations and investing in retirement plans now. You have just become a mom, so it’s the right time to build a financial backup to support the time you reach the age of retirement.
Take a look at some of the retirement options available to you:
a) 403(b) account
If you work in a school, religious institution, or health department, you may be eligible for a 403(b) plan. The 403(b) account works similarly to the 401(k) account.
b) 401(k) account
A 401(k) plan may be your best retirement option if you work in an office. It provides you with the ability to save and invest in your own retirement savings account. Apart from that, your company can contribute to your retirement savings through a 401(k).
c) IRA account
Individual Retirement Accounts, or IRAs, are a good way for you to save for retirement.
The IRA account allows you to save for retirement while avoiding paying taxes. Being a mom, you can contribute money you might be able to deduct on your tax return, and your money will grow tax-deferred until it is time to withdraw.
5. Increase financial awareness.
Some financial activities you need to perform are ongoing, so you should stay updated on your objectives. Some of these objectives are static, and some are dynamic. You need to maintain a balance between these two as you grow your finances.
a) Think positive about finances
You must approach your finances with a positive attitude. Someone with a good outlook can make wise financial decisions. Otherwise, you’ll only worry about wasting your money with a negative perspective.
b) Discuss finances
According to studies, 70% of people do not discuss the financial issues they encounter daily. In addition, more than a fifth of people admit to hiding debt problems from their partner, according to polls.
Feeling humiliated and alone in your financial struggles is not a healthy approach to taking care of yourself. So, let go of your guilt and reach out to a person who is close to you. You may also seek help from a supportive community while facing financial difficulties.
You can meet your loved ones and discuss your financial issues, budget problems, debt burden, and any other problems. Stop pretending everything is good and be open about anything that bothers you.
c) Create a routine for finance
Just as a health instructor teaches daily exercise plans to keep our bodies in shape, you must also establish a financial routine. Decide your weekly and monthly spending plans. It will be easier to track your spending and prepare a budget if you follow this strategy. This is an excellent way for new moms to take care of their finances.
d) Develop your financial goals
It’s hard to keep in mind the most crucial objective in your life. You may even get confused about prioritizing your life objectives to live your life peacefully and achieve financial freedom. That’s why developing a list of your financial goals is important.
Creating a list of financial goals can help you to stay focused on your life objectives. As a new mom, you have multiple responsibilities towards your kids, family, and yourself. Setting life goals will motivate you to achieve them.
e) Think about childcare costs
If you’re a working mother, those three to four months of maternity leave may go by faster than you expected. During that transitional phase, you’ll need to find someone to look after your child while you’re at work. This is a significant additional weekly expense that you have to bear.
Include this cost in your budget when you’ll need to hire a nanny or a babysitter. This includes both times when you have to work late or have a date night. This will well prepare you when it comes time to pay the babysitter.
6. Update medical and life insurance.
Parents have 31 days to enroll their new child in medical insurance. After that, you’ll need to provide your insurance company with a confirmation of birth letter from the hospital, or a birth certificate, along with the child’s social security number.
This document, or your child’s insurance card, will be needed when your child has appointments for vaccinations and growth monitoring, during the first 12 months.
Speak with a life insurance agent to purchase a new policy or renew an existing one, whether you’ve had your first, second, or third child. Also, be sure that both spouses are insured in case of an emergency.
7. Review the estate plan.
Review and modify your estate plan paperwork, including your will and any trusts, after becoming a new mom. Make sure you assign a guardian for minor kids. This should be a trustworthy person who can take care of your kids and take legal control over any assets left to them if you and your spouse die. If you don’t appoint someone, the courts will appoint one for you.
If you have a newborn baby and haven’t written a will in a long time, you may need to change beneficiary designation documents for your 401(k), IRA, and life insurance.
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Phil Bradford is a financial content writer and an enthusiast. He has expert knowledge about personal finance issues and he is a regular contributor to DebtConsolidationCare. His passion for helping people who are stuck in financial problems has earned him recognition and honor in the industry. Besides writing, he loves to travel and read books.
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