With the possible exception of losing one’s job unexpectedly, nothing shocks the financial system more than the birth of a child. Of course this is true if your household goes from two incomes to one, but it’s also true for those parents still earning two incomes but now paying for childcare. Kids are darling, but they are also very, very pricey.
Joshua Gans is a Toronto-based economist who speaks to this both professionally and personally. His book, Parentonomics: An Economist Dad Looks at Parenting, sheds light on the subject, but in a lighthearted way. I asked him for his take on the top three mistakes parents make with money.
Top 3 mistakes parents make with money
1. Don’t buy anything that is ‘upgradable’
Think strollers, high chairs etc. We are often attracted to the idea that as a child grows, we don’t have to go out and buy another thing and they can grow with it. However, this rarely works out. First, the upgradable things tend to cost much more than others which is perhaps fair enough as they are supposed to ‘save’ you costs of buying others.
Second, you often forget you are going to have more than one child and so if one has grown out of a high chair, the younger one will not have. So you will end up buying another anyway.
Third, these things don’t always last that long, especially if you have to fiddle to adjust them.
Finally, they are never ever as good as the ones that are made for a specific age.
Read more: How Amazon can save parents big bucks
2. Don’t buy experiences before the age of 5
That great show. That trip to Disney. The kid will not remember it and what is more you will have a worse time doing it. You can wait until they are older to see the ‘delight in their eyes.’
Read more: How to save on your next trip to Disney
3. Spending money
Don’t spend money on anything. That is a default rule and it really works out. Before you realize it, your kid didn’t need that toy or educational item. Much better to make do or borrow from friends and family. Worse still, those things end up cluttering the house. You end up keeping them because kids don’t want to let them go or because you can’t sort them or because you think they might be useful for a younger kid or, worse, a grandkid. None of that stuff is happening.