Avoid These 5 Money Mistakes New Parents Make

Raise a child for $100,000s less. No joke!

by Rob Bertman, CFA®, CFP® in Baby on the way
March 7, 2018

Think you’re ready to have a baby? Childhood is messy, chaotic and an absolute blast.

I would love for you to throw yourself wholeheartedly into parenthood and give all your time and energy to that adorable kiddo. But distractions and stressors can take away from that fun.

Let’s focus on the #1 source of stress and arguments in relationships.  MONEY $$$.

What do kids cost a lot of? MONEY $$$. (See where I’m going here?)

The 5 major financial mistakes couples make could drive a wedge into your relationship and take away from the joys of parenting. Nobody wants that!

I’ll tell you what they are, and give the most important yet simple tip in each category that could save you so much money you won’t believe it.

How much money? Oh I don’t know, how about $300,000 over the years vs other parents out there.

Let’s start with this fun fact:

The average parent spends $12,000 per year on a newborn according to Parenting Magazine. Hold on a second…


Sorry. I have to laugh at that. It’s thousands more than that just for what I call the 3-Ds of parenting: daycare, diapers & doctor bills.

Aside from the 3-Ds, couples make hugely important financial decisions when they become parents. We’re talking about many hundreds-of-thousands of dollars of decisions.

Some of these decisions are unavoidable. Others are flat-out mistakes that will lead to 20 years of struggling to make ends meet even if you earn 6-figures.

Want to give your all to your kiddos and maintain a strong connection as a couple? Well, then avoid these common money mistakes:

Mistake #1: We need a bigger…

The thought of adding an extra family member and all their stuff makes expecting parents feel like they need a ton more space that what they have now.

We need an extra room for the baby and all the toys! Will the stroller fit in my trunk? This car seat is going to take up so much of the back! Where will all the stuff go that we have to take out of the nursery? We need more space!!!!

What does this thinking lead to? Buying a bigger car and a bigger house.

Ready for the advice that will save you $200,000?

…No, seriously, I’m about to save you $200,000 for free.

You don’t need a new house or a new car.


“But we need more space for stuff and all of my friends bought a new house and a new car when they had their first kid.”

If your friends jumped off a financial cliff, should you?

Trust me on this one. In year one with a new baby, your expenses on necessities are going to go up, up, up with the 3-Ds. First figure out how to work that into your budget before taking on the major expense and a ton of extra debt.

“But my monthly payments won’t change.”

Forget about the monthly payment and look at the total cost.

A new family car still costs $30,000. If you lease, you’re still spending about $15,000 over 3 years then committing to another $15,000 when you change cars…and another…and another.

Buying a new car could mean paying $400 per month for the next 6 years vs $0. That’s $30,000 that you might not need to spend! Wouldn’t you rather have that in your bank account?

About that house:

I have worked with way too many couples who come to me AFTER buying the new house. Most of them tell me they wish they hadn’t done it. Why?

They didn’t realize how much it costs to raise a kid or how much more it costs to own a house vs renting.

Things were tight with those new expenses plus the bigger mortgage. All it took was one maintenance issue with the house (which is VERY common and almost always unplanned). Now they are thrown into the tailspin of carrying credit card debt, never having enough in their checking account and struggling to get out of paycheck-to-paycheck living.

Oh, and by the way? Most of these couples have 6-figure income.

Being house poor and strapped for cash does nothing but create stress and anxiety which puts your relationship on edge. 

So what should you do?

Money Saving Advice: Avoid the “We need a bigger…” purchases for at least 1 year.  

Before spending an extra $20,000-$200,000, it makes sense to see if you actually need to do it.

After a year with a baby and managing the 3-D costs, you’ll have a much better idea of what you really need and what you can truly afford.

Mistake #2: Deciding for one parent to stay at home after a back-of-the-envelope calculation.

There can be nothing more gratifying for a parent than staying home with their baby. If that’s what you’d like to do, go for it!


If you’re making the decision based upon money, then your calculation could be missing tens of thousands of lost income and expenses over the years without knowing it.

Here’s the back of the napkin math people use:

First kiddo: “My take home is about $3,000/month and a nanny or daycare is pretty close, so it makes sense”

Second kiddo: “With the cost of having two kids in daycare, one of us should definitely stay home with them until they go to kindergarten.”

Here are 3 reasons why you shouldn’t do this kind of faulty math:

Reason 1: Think about your career trajectory over the last 5 years. Did you get any raises or promotions?  Did you gain any experience that makes you more valuable to employers? Chances are that the answer is, “Heck yeah!”

Well if you are out of the workforce for the next 5 years, what raises, promotions, and experience would you be giving up?

Average wage growth over the last 5 years has been just shy of 3% per year.  That means the average person who is re-entering today after 5 years has lost out on about 15% growth in wages. Someone who made $60,000/year could now be making $69,000 year.

Reason 2: Re-entering the workforce is tough. Many have resumes that employers would be fighting over. But they end up having trouble finding full-time work.

The reality is that most stay at home parents start by taking on part-time work and are making a fraction of what they made when they left the workforce.

An article from the Harvard Business Review states that 73% of women who try to find work are actually able to do so, and only 40% find full-time employment. Men face similar challenges as well.

Reason 3: Parents who stay home with the kids spend money too: Most parents (and their kids) need to get out of the house and break things up. They seek out classes and activities for their kids (and themselves). Maybe they go out to lunch or coffee with their friends on a regular basis.

I’m not saying it’s the cost of a nanny or daycare, but it’s at least a few hundred dollars a month extra.

Conclusion: Missing out on raises and promotions then going back to part-time work plus the extra daily expenses is a tens-of-thousands a year decision. Not only in the 5 years staying at home, but in the years that follow because of the new career trajectory.

Again, if one of you really wants to stay home with the baby, I’m all for that. If it’s for financial reasons, do some research and take your time to run the numbers.

Money Saving Advice: Open up a spreadsheet and start with this simple calculation:

Current and expected take home pay until the baby would start Kindergarten (include bonuses and raises).


The cost of child care until Kindergarten (Take an average of 3 places you would send the baby and increase the cost by 3% each year).

Mistake #3: Buying everything new.


You might be thinking about the ongoing child related expenses, but what about all the things you need to buy to get ready for the baby?  I call these the “startup costs”.

The Bump estimated the cost at $10,000+. This includes setting up the nursery, clothes, diapers, gear & clothes. We’re talking about a crib, stroller, blankets, diapers, a pump, car seats, and other supplies.

Here’s one simple thing to help you save thousands before the baby arrives:

Borrow 80% of everything you need.

Did you know babies (and all kids for that matter) grow out of clothes quickly? Who knew!

We’ve been fortunate to have 3 other families with kids just ahead of ours in age who we share clothes and gear with and it has saved us so much money.  

We’ve gone as far as to label then combine all of our kids’ clothes into bins separated by age ranges.  When my daughter turns 18 months, we’ll get the 18-24 month bin to go through and send the 12 month clothes to someone else if they need it.

Cribs and strollers have moved from house to house as babies are born then grow out of them.  Car seats make the rounds as long as they haven’t expired.

After all of our kids are out of it with no others in sight, it all goes to Goodwill.

Sharing is caring and it’s easier than you think, because packs of friends have babies around the same time.

Here’s another tip: Grandparents love buying this stuff!

If they offer, say yes! Will you love everything, no. Will there be some great things, absolutely.  

Will it save you serious dough? You betcha! It’s a win-win.

Money Saving Advice: Start by picking one friend, sibling or cousin who has a kid and see if they have any clothes or baby gear that they will no longer use.

Mistake #4: No plan to pay back your student loans.

If you’re one of the 44 million people in the US with student debt, listen up.


Do you know the year when you will be student debt free? How familiar are you with the multitude of payment plans and which one would be best for you? Now is as good a time as any to figure out when you will be debt free and fully understand what your monthly payments will look like.

Get a clear path before the baby comes.

If you have $100,000+ of student debt, it can become pretty complicated and overwhelming to figure out what to do. Plus, there are a lot of scams out there that claim to help you “consolidate”. Stay clear of those.

Money Saving Advice: Those of you with 6-figures of student debt, definitely look into a Student Loan Planner consult.

They have done more than 800 student loan consults covering more than $200,000,000 of loans.

If you want a clear path to paying back your student loans that will save you thousands, that’s the way to go.

Mistake #5: No plan to pay back credit card debt or build up your savings account.

If you have credit card debt, you’re not alone. Almost 50% of households do.

I’m not going to tell you, “This is terrible! Do you know how much you’re paying in interest?”

I’m not here to judge. You could have a perfectly good reason for it.

If you’re someone with no credit card debt, could you come up with $10,000, still pay your other bills, and not carry a credit card balance?  

Yes?  Ok, now let me ask you this?  How many months would it take to replenish that $10,000 in your savings after you spend it?

Here’s the point:

Your baby-to-be is going to cost you north of $10,000 in his or her first year of life.  That’s in addition to what you’ve been spending over the last couple of years.

Money Saving Advice: Practice being able to save an extra $500 to $1,000/month.

Use that money to pay back your credit card debt or build up a bigger cash cushion.


You’d bolster your finances and prove that you are ready to take on the extra expense…I mean bundle of joy!

Expert tip: Have fun now and work in a babymoon. If you’re not familiar with that, it’s when you take a fun trip as a couple 3-6 months before the baby is due.

Yes, I’m actually advising that you spend money.  It’s an investment in your relationship. See? It’s not all about cutting costs.

The Major Challenge Couples Face

Now that we’ve covered the top 5 mistakes and how to avoid spending $100,000s that you don’t have to, it’s time to talk about a major problem and advice that you will no doubt get.

Most financial advisors (and parents for that matter) will give you this advice, which by the way, I totally despise.

“Keep a budget”.

Yes, I, Rob Bertman, CFA, CFP® despise the word budget. Here’s why.

Budgeting does NOT work!


Ever tried going on a diet? Who hasn’t. How long were you able to stick to it? Did you have to try a bunch of different ones to find that that could actually stick with?

Budgeting is pretty much the same as dieting. How many techniques have you tried?  How many budgeting apps have you downloaded to your phone? Have any of them stuck?

There are two major reasons why it doesn’t work:

1: It’s complicated and restrictive. How great does it sound to give up the fun and track all these numbers? What? That doesn’t sound appealing?

2: Working hard with little to no instant results. How does not ordering that extra drink make me more wealthy?

It takes time to see the life-changing results so the change of habit is really tough for the first few months, and if you feel like you have to sacrifice, it is doomed to fail.

I had the same problem, and I’m a financial person.

It wasn’t until my first kid was born that I realized that my budget didn’t work. The money went so much faster after our first kid and I wish I had saved so much more beforehand.

Well I developed a technique that helped us cut our spending significantly. We’ve been using it ever since. It worked so well, I started helping clients get great results too.

My simple 3-bucket technique called Keep, Cut Back, Eliminate has helped clients sustainably cut their spending by more than 11% without a complicated budget and without missing out on the fun.


We’re talking thousands of dollars that stay in their pocket each year, helping people save more money, pay back debt and escape the paycheck-to-paycheck way of life.

Interested to see what it’s all about?

Sign up for my free 5 step guide and give it a shot.

The best part about Keep, Cut Back, Eliminate for me is seeing the relationship transformation.

Money arguments are the #1 relationship killer. This technique has dissolved conflict and stress for couples around money. Seeing the transformation is my favorite part of working with couples.

During a recent video chat, I noticed the couple I was working with had very negative body language toward each other. They were angled away from each other and not making any eye contact. They were also confrontational about money.

By the end of the call, things had shifted dramatically! They were holding hands, his arm was around her, and they were laughing with each other. Plus, they actually agreed on the plan! This is my favorite part and it happens almost all the time!

Do you and your spouse agree on money 100%? I didn’t think so. My wife and I certainly didn’t.

A plan that works for only one spouse is doomed to fail. Keep, Cut Back, Eliminate solves that problem too. It gets couples on the same page and reduces arguments so you can work together.


Do you want to save more money and argue less about money? This will help you. No BS.

Learn how it works right here.

Here’s a recap of the 5 top mistakes

  • We need a bigger…
  • Staying at home after a back of the envelope calculation
  • Buying everything new
  • No plan to pay back your student loans
  • No plan to pay back credit card debt or build up your savings.

Now you have some very simple tools to avoid these financial blunders.

So are you in?


Great! I’m here to help you see it through.

Let’s start by telling me which one resonates most with you. Get in touch with me and let me know.

I’m here to help!