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How people choose to handle their money is a personal experience — one that’s often hard to discuss. In this series, NerdWallet talks with people from various walks of life to discover how they budget, in hopes that the lessons they’ve learned can help you.

Kristina Zeller says she and her husband are “terrible” at budgeting, but with little debt, an emergency fund, automated retirement savings and money left over for weekend entertainment, it’s obvious the couple are doing something right.

Ryan and Kristina Zeller met in 2010, while both were working at Disneyland in Anaheim, California. They were married in 2012 and by the time they welcomed daughter Sawyer in November 2016, they were as financially prepared as they could be.

“We didn’t have a kid until about five years after we were married, because we wanted to pay off cars, student loans and some general debt,” says 27-year-old Kristina, now a real estate agent in Raleigh, North Carolina. Ryan, 32, is retired from the Army and works as a personal banker.

Though their annual household income fluctuates with Kristina’s self-employment, she says they’ve averaged between $90,000 and $120,000 annually for the past three years. “Everyone says you’re never really financially ready to have kids, but I don’t think that’s necessarily true,” she says.

Planning for Parenthood

Nearly 4 million babies are born in the U.S. each year, according to the Centers for Disease Control and Prevention. Each one represents a change in the family dynamic, and significant change in household finances. According to an online Harris poll commissioned by NerdWallet, 29% of new parents had nothing saved up to help manage the costs of their baby’s first year. The Zellers did considerably better.

By early 2016, Kristina felt they were in a good enough place financially that pregnancy wasn’t a frightening financial shock. Once they found out they were expecting, they buckled down on saving money in anticipation of their new baby.

The couple were already in the habit of saving, aiming to set aside one-third of their monthly income “in some form.” This includes the $1,500 they have automatically deposited into an individual retirement account, and additional funds into other savings. Now they had something new to save for.

“I’m self-employed, so I don’t get maternity leave. I don’t get any kind of leave,” Kristina says. Knowing they’d be entirely dependent on Ryan’s income for the months after Sawyer’s arrival, they managed to sock away $5,000 before her birth.

» MORE: Retirement Plan Options for the Self-Employed

One-third is a high savings rate, according to Courtney Ranstrom, a certified financial planner at Trailhead Planners in Portland, Oregon. Nationally, the personal savings rate was just 5.3% in April, according to the Bureau of Economic Analysis, and Ranstrom recommends new parents start by putting 15% to 20% of their income toward savings. But, she points out, how much you’re able to save has a lot to do with how much you pay to live, and the cost of living in North Carolina is much lower than some other areas. To that point, the Zellers have a three-bedroom, 2.5-bath, 1,700-square-foot home in a nice neighborhood. Their monthly mortgage payment is $1,550.

» MORE: How Much House Can You Afford?

The Zellers were also fortunate that Sawyer was conceived while Ryan was in the Army, and born within six months of his retirement. All prenatal care, childbirth expenses and medical care for her first six weeks of life were covered by Tricare, the provider of military family health care.

Saving for Day Care, College and Beyond

“I know everyone tells you that daycare is expensive, but oh my god, it’s really, really expensive,” Kristina says. The couple were surprised by the $1,300 in monthly child care costs. Nationally, one year of full-time infant care averages $8,059, according to a NerdWallet analysis. Expectant parents can better prepare for these costs by pricing their options — such as child care centers or family day cares — before baby arrives.

Ryan and Kristina have begun to plan for Sawyer’s higher education, but they’re not taking the typical route. According to Kristina, they’ve put $5,000 in a CD that they’ll move as it matures. They don’t know whether Sawyer will want a traditional college education or if she’d need full tuition, so they aren’t sinking thousands into the fund at this point.

“I think a lot of parents put way too much emphasis on saving for their child’s education versus their own retirement,” says Ranstrom, who recommends parents get on track for retirement and have an emergency fund with six full months’ of living expenses before thinking about their kids’ college.

Nerdy Tip

Saving for retirement should remain a top priority for parents who don’t want to have to financially depend on their children later in life.

Room for Improvements

Despite having several thousand dollars saved before Sawyer was born, automating retirement savings, having an emergency fund in place, and still finding money for a small college fund, Kristina says they have work to do. They don’t track monthly spending and could cut back, she says.

Kristina says she spent too much clothing her newborn, and she’s not alone — 20% of parents said they wished they had spent less on clothes in their baby’s first year, according to the Harris poll.

“We have no actual budget,” she says. “We spend far too much on convenience and eating out, and our goal for the year is reining in our spending overall.”
Still, given their current financial picture, the Zellers are doing pretty well and their meals out may not be as big of an indulgence as they think. Ranstrom recommends all new parents remember to spend some money on themselves — not everything needs to be about the baby.

“Try to budget for some things that still make your heart happy,” she says. “Find ways to still be you while you’re going through the biggest change of your life.”

As for making their hearts happy, Kristina and Ryan enjoy visiting craft breweries and museums on the weekends. They like heading to the lake in the morning when it’s quiet, and hanging out at home, watching Disney movies with Sawyer and the family dog. “If our child isn’t a Disney freak, I don’t know what we’ll do,” Kristina says.

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