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How everything changes about your financial life when you have a baby

For many women, life’s greatest source of financial stress comes with motherhood.

New expenses — along with questions about how much time to take off after a baby is born — plague many new moms today.

Kimberly Palmer, author of “Smart Mom, Rich Mom: How to Build Wealth While Raising a Family,” spoke with Yahoo Finance about some of the key financial strategies moms should think about.

“As soon as you become a mom, everything changes about your financial life,” Palmer told Yahoo Finance. “Not only are you suddenly thinking about totally different long-term goals like saving for college, but you’re also balancing all of these new day-to-day costs like childcare expenses.” She added that even smaller expenses like diapers add up over time.

Palmer explained that this is the perfect time to set up goals and a management system.

“It’s a great time when you become your mom to sit down and think about how you’re going to manage all this, how you’re going to pay for these day to day costs while also planning for the long-term goals, including your own retirement,” she said.

While a lot of motherhood advice focuses on bargain-hunting and couponing, Palmer said, the real financial decisions related to motherhood are far more complex.

“So much of what we hear as Moms is about couponing and saving a $1 here or there at the store,” she said. “Being a mom is about so much more than that. It’s about making really big and hard choices for your family about prioritizing different financial goals and setting up things like life insurance and preparing for unexpected things.”

Frugal luxury

Palmer explained that most mothers want to prioritize time with family and noted that “frugal luxury” could help make this possible.

Here’s how she defined that: “Frugal luxury to me means investing in things that give you more time with your family. It might mean doing something like spending money [on] having your groceries delivered on the weekend so you’re not spending an hour at the grocery store, making choices and tradeoffs like that that really prioritize what’s most important to you.”

Career

One of the biggest choices facing women is how much time to take off work after having a baby. Palmer said that it shouldn’t be a simple calculation of childcare costs and current income.

“If we just think short-term in terms of childcare costs, it discounts down the road what our plans will be, and how we’ll get back into the workforce if we do take time off,” she explained. “I found it’s so important for moms to think about the future and what they want out of working down the road if they return to work as their kids grow up. Even if you’re scaling back in the short-term, if you can still find ways to take on contract work or freelance work and maintain your professional networks, then you still have that control and power to ramp up when you’re ready.”

The bottom line: Financial health in motherhood is about much more than couponing. It’s about setting up long-term goals while managing new expenses. It’s also about setting an example for your kids, according to Palmer.

“It’s really important for kids to see how we’re making decisions about money … They’re watching us so closely,” she said.