First off, if you’re here reading this, I’m going to assume that you’re either expecting a baby, or are a new parent. In which case, congratulations! It’s exciting isn’t it? Babies are lovely, they are so “squashable” and just little bundles of cuteness.
So moving swiftly on to how exactly do you financially plan for a new baby? Well the first thing that I need to say is it’s tough. It’s tough because you aren’t just planning for a new baby, you’re doing that ON TOP of all your regular expenses and activities. That actually leads nicely into the whole point of this blog post – how to start saving for your new bundle of cuteness.
When they start trying to save for the things they are going to buy for a baby, a lot of my clients focus immediately on the question “how quickly can I save?” When you think about it, it’s fairly obvious why. Often when we start saving for a baby, we usually know that we are “expecting” – and so we feel that we are on a deadline, that we have to have everything that is on our list before our baby is born.
I understand that feeling, that urgency. In fact, it’s “built-in” to our brains when we are pregnant – the urge to nest. Biologically speaking, we want to create a safe, secure, comfortable environment to return our young (our baby) to once they are born. Because we live in the modern world, this means that we (particularly as mums) try to create that environment before the baby is born – both so that we have “nested” sufficiently, and so that we don’t have to try and make mad-dash purchases at the last minute or in our new baby haze.
Yet the one key lesson that I want you to take away from reading this is that babies don’t actually need half as much “stuff” as we think they do. There are the basics, of course, a cot/Moses basket, a car seat, sleepsuits and the kit for however you are planning on feeding (be that breast or bottle). Beyond that, however, a lot of the additional “stuff” is just that – stuff. Therefore although you are going to want (and use) a whole lot of it in the coming months, you may not need all of it immediately – and you may not need to save up for it with the urgency that you are feeling.
So what is my key lesson when it comes to saving for a baby?
Reward yourself too – prioritise saving for your baby, but don’t deprive yourself
Pregnancy and the “nesting urge” aside; as humans we aren’t very good at saving for things in advance of them happening – and the reason for that is a thing I call the “deprivation principle”. When we set a savings target our brain feels like we are telling it that we can’t have something – that we are “depriving” ourselves in the present for the sake of a future event that may or may not happen.
Now even though our motivation for that “deprivation” when we are pregnant is really strong (especially when we remind our brains that the future event, the birth of our baby, will be happening), and even though we know that we really need or want to save up for those things – like nursery furniture or because we want a babymoon – we are less likely to follow through with that savings plan over the longer term, because of the over-riding narrative that our brain creates around “delayed gratification”. With that in mind, my suggestion is that rather than trying to ignore your brain’s objection to saving because you might be “depriving yourself”, I encourage you to lean in to it. Just a little. I know, that’s unusual, isn’t it? A financial expert telling you to lean into your brain’s “anxiety” around saving as much as you can as quickly as you can? I promise you, there’s a good reason for why.
Without further ado, here are my two simple tactics when it comes to saving for baby. In order to ensure that you stay on track with saving the amount that you want; you have to actually focus on your baby, AND yourself.
Tactic 1: Permission-based savings.
Permission-based saving means you automatically “factor in” some immediate gratification, to stop your brain feeling like you are being “deprived”. This will keep you on the “savings wagon” for significantly longer than just going big, and fast. Have you ever heard the mantra, slow and steady wins the race? That’s the idea behind this savings strategy.
Say you want to save £1,000 in 5 months. You could save £200 each month. But that feels like a big ask, doesn’t it, especially if you haven’t been putting that cash aside before. What if instead of £200, you saved £150 over 8 months. Each month, put £125 of it in savings, and pay yourself £25, to spend as you please. Because you aren’t depriving yourself, and in fact you’re giving yourself “permission” with some of it, you’re more likely to follow through with the saving.
Tactic 2: Scaling your savings.
Scaling means exactly what you think; that we start low, and gradually climb up towards a higher sum. This works because humans like to compete – and no more so than against ourselves. You know the premise behind a step-counter? That you always want to beat yesterday’s target? This is the same idea. Take that £1000 that we used in the previous tactic. Now say that you’re going to start month 1 saving £50. If you increase each month by £25, you’ll have £1000 in 8 months, plus £100 as a “reward” for yourself.
Now obviously, both of these tactics will take you three months longer than the initial 5 month target. However, because you aren’t “delaying gratification” or setting arbitrarily high savings targets from the outset you are much more likely to stay on track to save the amount that you want for your new baby costs. What’s great with these tactics is that they work with any amount of saving that you want to achieve – (albeit you might not start as low as £50 each month if you want to save £5,000…)
Pretty simple, but also pretty effective. My kind of top tactics!
Charlotte Lidstone, Money Communication Coach