Having your first child can be an incredible experience in and of itself but eventually, the weight of the responsibility can cause some folks to adopt poor financial habits. Whether you’re going into parenthood with great or bad credit, it can always get worse if you’re not careful. It’s important to remember that there’s going to be one more person depending on you, so moving forward, you have to start drawing those fiscal lines in the sand that will help you build and preserve your credit score.
To say mazel tov on your new child, here are five easy ways you can raise your credit as you raise the little one.
1. Automating your finances
One of the first things you’ll notice as a new parent is that your normal schedule goes out the window. Things become hectic and you’ll find that through a combination of less sleep and more on your plate, that your day-to-day will become a haze.
Timeliness is crucial when paying bills and making your credit card payments, and if your aim is to survive the postpartum experience with your credit—and sanity—intact, then you’ll need a way to ensure you pay your bills on time. Today, most banks and companies provide online services to help customers automate their bill payments. You can assign bills to days and on that date, money will be withdrawn and sent as payment for that bill.
By automating your bills, you can eliminate a task from your long list of things you’ll probably forget to do. Besides, it’s better to be bouncing your baby than a check.
2. Buying supplies when you need them
Baby gift registries are notorious for suggesting you buy everything under the sun to prepare for a new child’s arrival, but reality says differently. Every family parents differently and you don’t need everything to be ready for a baby. Use this line of thinking to not only spread out our purchases but to keep yourself from splurging early on.
When you’ve got a bun in the oven, it can be tempting to go all out and outfit your future child’s room with things they’ll enjoy for years to come. The problem with many of those purchases is that your child may not actually be able to enjoy them until they’re a few years old. Strollers? Wait until your baby can hold its head up on its own. Cute baby furniture? Chances are, junior won’t be using that tiny loveseat until he can sit up on his own, so why blow $200 on a purchase that may not even last two years?
Babies don’t require too much in the way of possessions, believe it or not, so eschew with the belief that you “must have” everything the stores tell you a prepared parent will need. If you do have some shopping ahead of you, don’t put all the purchases on a single credit card—or use credit at all if you’re close to maxing out any of your cards. Going into parenthood with credit card debt can be tough, so it’s best to reign it in now before all the medical bills arrive.
3. Remembering your rewards
Plenty of cards offer cash-back rewards, and keeping with the theme of tip number two, it’s important to use your rewards. If you’ve managed to earn a few hundred dollars in cash-back rewards, why not use it to pay off a larger purchase you just made, say on a bassinet you really liked at the boutique down the road.
4. Saying “no” to more credit cards
You might feel financially overwhelmed with the extra costs you incur as a parent. Diapers, clothes, hand sanitizer, wipes, the list goes on. It might seem like an easy fix to take out just one more credit card—or even better, a cash advance using your card.
Wrong. Bad idea. No.
You want to preserve your credit score and presenting yourself with extra opportunities to damage that credit is only going to invite temptation and trouble. You also shouldn’t treat your existing credit cards as cash emergency funds. Cash advances should be used as a last resort and never with your credit card. Repayment terms can be brutal and backed by incredibly steep interest rates or unyielding terms.
Your best bet to prevent yourself from feeling like your only option is more credit or a cash advance with your card is to establish an emergency fund early on. As early into the pregnancy as you can, start saving. Cut back on expenses. Buy the off-brand of things you can do without. Just save. This money will help you build a budget for your life as a new parent and will encourage better spending habits once the baby has arrived.
5. Taking things one project at a time
Taking on the role of mother or father can be daunting, so don’t overdo it by taking on more than you can handle at one time. Halfway through your pregnancy is probably not an ideal time to move into a new place and spend five grand on repairs and renovations.
Remember tip two (it’s an important one) and only make the purchase or take on the project when it’s absolutely necessary. You don’t have to swap out the one-bedroom apartment for a four-room house, or the convertible for a minivan when you find out you’re going to be pregnant.
Taking care of the baby should be your number one priority. Everything else will fall into place over time so long as you budget wisely and keep an eye on your credit score.