Chapter 1: Just Starting Out (Part 2)
Posted by Gail | Filed under Money Rules
Daphne and I had been friends since our 20s when we’d met at a party thrown by a mutual friend. We’d fallen in like immediately. Daphne had worked while Marcus completed medical school. He graduated with an albatross of student debt, so they limited their spending and worked hard to pay it off. When Daphne had her first child, she chose to stay home, working on her degree part time while raising Kirk first, and then Darren three years later. By the time Lexi came along seven years after Darren, Daphne had launched her own business. She lavished all the good stuff she could on her beautiful baby girl.
Although I hadn’t seen Daphne in several years, we’d always kept in touch through email and on Facebook. And I loved looking at the pictures of her family as the children grew and Daphne and Marcus prospered. They had done very well for themselves.
Lexi was a good girl. She worked hard at school, ran track, got a partial scholarship to university and completed a double honors degree in four years. At 24 she was working her way up in the fashion industry, not making a lot of money, but having a ball.
“So tell me about Matt,” I said as we walked back into the living room, Lexi carrying the tray and me a plate of finger sandwiches and chocolate brownies.
“We met at university and started living together when we graduated from school,” said Lexi. “Paying for one place makes way more sense than keeping two apartments. I was always at his place in fourth year anyway, so it just seemed like the right thing to do.”
“Was this baby planned?” I asked.
“Not planned, exactly,” she said as she poured the tea. The gold-rimmed, white bone-china teapot shook a little in her hand. “But we love each other to death, and we want this baby, so we’re going to make it work.”
“Have you worked out how much you’re going to need initially for the baby, and then long term.”
“Not really, it’s still early days.”
“You’ll be stunned at how quickly the next six months fly by,” I said. “You better put pen to paper and come up with a list of what you’ll need and how you’ll pay for it.”
Gail Rule: Babies Are Expensive
The standard maternity benefits leave very little wiggle room. If you’re using every penny of your income(s) to make ends meet, you may be in for a bit of a shock when you have to do so on less money. How much less? Well that depends on whether you’ll get a top-up at work or not. If you don’t you may be in for a shock when you find out what your maternity leave benefits amount to.
Make a budget for your mat leave. Hey, you can keep flying by the seat of your pants but I guarantee you’ll end up in debt. With a little foresight and some planning you can come out of this will your financial life still in balance. If your income is going down, you’ll have to prioritize where you’ll spend your money.
Say buh-bye to the nice-to-haves. Time to focus on the must-haves. Eating out, entertainment and big-boy and big-girl shopping will come to a grinding halt. With a baby coming, you’ll be exchanging your disposable income for disposable diapers!
Don’t wait until baby’s arrival to put your new budget into action. Practice living on less as soon as you find out you’re pregnant. Use the difference between your regular pay and your mat leave income to get rid of debt, build up your emergency fund and buy the stuff you’ll need (NEED!) for baby. Practicing living on less now means you can get a sense of what it’ll be like when baby gets here. And you’ll have some money for any unexpected expenses that pop up.
Don’t get swept away by all the great baby stuff you’ll be tempted to buy. Babies are a great excuse to spend money. Don’t get suckered into dumb crap like specialty diaper disposal units or wipe warmers. (Seriously?) Do you really need a specialty piece of furniture for changing baby’s diapers? Buy a stack of receiving blankets. Lay one out on your bed, the couch or the carpet to change the baby. Savings: $200.
Make a list before you head out to shop for baby. And before you put your hand in your pocket, call your friends and family to find out who has stuff they can lend you so you can whittle down your list. Make sure you register if someone is throwing you a shower so you get stuff you need, not just stuff other people think is cute.