Why People’s Debt Can Increase After Kids

Why People’s Debt Can Increase After Kids

Some people have perfectly good credit scores and have a great financial situation until the day they become parents. People with kids are statistically shown to carry a significantly greater amount of debt. This comes a no surprise of course since they are welcoming a new mouth to feed into their household. Studies show that parents spend about $800 a month extra per child on average. That’s a big shift from having to spend only on yourself and your partner. Can you anticipate this kind of increase in expenses? Or will you go into debt?

Some people just can’t seem to figure out how to make it work and there are a variety of reasons why. Let’s take a look at some of the biggest reasons why new parents’ debt can increase after a baby and how you can avoid it.

Lack of Child Support

Some parents utilize a single stream of income to handle the expenses of a child on top of their own, which can be a monumental task. In order to smoothly navigate through the process of raising a child as a single parent, it is important to frame a child-support agreement with the help of a Family Law Attorney Phoenix, or one located elsewhere. This helps mitigate financial problems for the parent who has taken the decision to raise the child on their own.

They Don’t Put Away Savings

Having a baby means having to purchase all of the gear before they arrive. They’ll need a bed and everything that goes in the room with a bed. Bottles, swings, vibrating chairs, carriers, diapers, changing tables, and about approximately 5,000 other things.

It’s important to put away savings so that you can anticipate these costs when your little bundle of joy arrives instead of just running it on a credit card and sending yourself into spontaneous debt. Ideally, you’ll already have savings to begin building from but when you become pregnant you can start saving more aggressively.

Luckily, pregnancy can lead to being much less social so this can be an advantage to your wallet. Take advantage of this time by not going out and buying drinks and food and putting it away into your savings.

But even for someone with a well-paid job, it can prove to be a challenge since you’re not always guaranteed maternity leave or paid time off while you raise the baby. Daycare costs are getting higher every year, and without another parent to help with childcare, that means you’re going to need to pay for a lot of it. This can lead a mom or a dad straight to their wallet for the credit card to save the day. Unfortunately, this means they are about to have to pay for debt on top of all the things they are already paying for.