My oldest daughter starts high school next week, a development I clearly saw coming for 14 years but which is shocking nevertheless. I can't believe she'll leave home for college in four years, this beautiful blond bundle who slept through the night at six weeks of age -- and made me think for a brief, shining moment that I had this parenting thing licked. (I was quickly enlightened to the contrary.) In any case, I received an email from an expectant couple that inspired my nostalgia for those sweet newborn days.

My husband and I are pretty good when it comes to money situations but we would definitely like to learn new and better ways. We are 29 and 27 expecting our first born so I was wondering what is a good technique for budgeting with a newborn or just budgeting period. I have officially started my maternity leave and I will be receiving 60% of my pay which is better than receiving nothing. I know with a newborn just right around the corner that we will come across different situations that we haven't experienced yet. So that being said I just mainly wanted to know some tips or ways to not have stressful times with becoming new parents. I would greatly appreciate some advice on this.

Congratulations! Welcome to the most meaningful and expensive journey of your lives! Government statistics estimate the cost of raising a child to age 17 in excess of $250,000, which doesn't include the toughest nut -- college tuition. So you're smart to think ahead.

I think the biggest early financial pitfall is overspending on complicated baby gear and services that don't add much value. Parents are easy targets for savvy marketers, because we want so badly to equip our kids for happiness and success. But a clean, hand-me-down stroller -- as long as it meets current safety standards -- will do the job just as well as the new $600 model. (Check out this simple list of basics from a mother of four.) Designer clothes are adorable, but your newborn will grow out of them -- and puke and poop on them -- in short order. A playgroup with other moms offers a child just as much social stimulation as a Mommy and Me class. As for formal tutoring, let's just say I blew a pile of cash on French classes for a 3-year-old ... who is now 14 and taking high school Spanish. (Quelle dommage!)

So save on the small things and put that cash into a 529 college savings plan, which you can open right now. (Name your child as the beneficiary after he is born.) At current inflation rates, the cost of sending your child to a public college for four years will be a little over $184,000, according to a calculation based on figures from the National Center for Education Statistics. You can save that in full by putting $425 a month in a 529 plan now (assuming a 7% average annual return).

Alternately, save a third of that goal, pay a third out of your income when the time comes, and tap a combination of grants and loans for the other third. That would mean stashing $143 per month in the 529 plan – or less than $5 a day. (Your kids can also work and save toward that goal: My 11-year-old became a dog-sitting mogul this summer.)

As for budgeting, it's crucial when you have kids and are paying for daycare, preschool and the like. I'm a huge fan of software that links electronically to all of your accounts (checking, savings, credit cards, etc.) and allows you to record and sort your purchases in real time. I use a subscription software called Mvelopes. (Full disclosure: I freelanced for the site in the past.)

Mvelopes is based on the old-fashioned envelopes system my grandparents used: They divided the cash from their paychecks among physical envelopes (food, rent, utilities, clothing) and when it was gone, they stopped spending. Mvelopes has "virtual envelopes" on the screen linked electronically to your accounts. Let's say I budget $100 a month in my clothing envelope; when I swipe my debit for $50 at the Gap, the purchase shows up in a "new transactions" folder. I click and drag it into the clothing envelope, which goes down by $50, so I know I have $50 left to spend in that category for the rest of the month.
If you prefer free software, Mint.com is a popular option, or check out this list of free budgeting tools. Good luck!



Content Solely Informational: Content on this site is for informational purposes only and is not intended to be investment advice, or any other kind of professional advice. You must determine for yourself or in consultation with a professional whether any financial strategy or advice is right for you.

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