10 Money Mistakes Parents Make
Kimberly Palmer

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There's no getting around the fact that children are expensive. The Agriculture Department puts the cost at $40,000 for the first two years of a child's life for typical married couples earning more than $98,470 a year.

But one reason children are so expensive is because parents, especially first-timers, make many common mistakes that end up hurting their bank accounts. Here are 10 frequent missteps, adapted from the new book Generation Earn: The Young Professional's Guide to Spending, Investing, and Giving Back, and how to avoid them.

1. Making the nursery look like a magazine shoot.

Decorating the baby's room doesn't need to mean buying everything new. In fact, Shannon Honeybloom, author of Making a Family Home, suggests incorporating handmade, vintage, and natural items into the décor. "Frame some of your old baby photos and grandma and grandpa's old baby pics too, and hang them in the room... A pretty piece of driftwood placed on a shelf makes a beautiful natural sculpture," she says.

2. Taking product recommendations from friends with totally different lifestyles.

Your best friend who lives in Iowa might swear by her snap-and-go car seat and stroller, but if you live in the middle of Manhattan and spend more time walking than driving, you probably want to invest in a comfortable baby carrier or compact stroller instead.

"I recommend thinking less about how close a friend is and more about how similar her lifestyle is," says Ali Wing, founder of Giggle, an upscale baby product store. "My best friend is seven inches taller, a stay-at-home mom, and lives in a small town. I live in a high-rise in New York City. Our needs are totally different," she says.

3. Making career decisions on maternity leave.

After giving birth, new moms often feel tired, overwhelmed, and like their pre-baby life took place on a different planet--one they might not want to return to.

That's why Caitlin Friedman and Kimberly Yorio, co-authors of Happy at Work, Happy at Home: The Girl's Guide to Being a Working Mom, recommend checking out completely for at least several weeks, then getting back in touch with your professional self slowly. Wait to make big decisions, especially leaving the workforce altogether, until you have a chance to recover from the complete exhaustion that comes with taking care of a newborn.

4. Forgetting about non-traditional child care options.

Hiring a nanny or signing up for daycare might be the most common choices, but they're certainly not the only ones, especially for parents with more flexible work schedules. Consider trading duties with other parents by forming a babysitting co-op in your neighborhood.

Parents earn points for each hour they babysit, and then they spend those points by "buying" child care for their own children. "It's a wonderful alternative to paying hourly for an occasional babysitter," says Lisa McLellan, a professional child-care provider and founder of babysittingworld.com.

5. Saving money on the wrong things, such as second-hand cribs, car seats, and high chairs.

Safety is your biggest priority, and given all of the recent recalls involving cribs and high chairs, it's better to buy these items new. At the very least, check the Consumer Product Safety Commission website before making used purchases to be sure to avoid brands that have been recalled. You probably want to avoid drop-side cribs, for example, which have been the focus of multiple recalls.

6. Spending money on the wrong things, from wipe warmers to Swarovski crystal pacifiers.

Yes, crystal pacifiers really do exist. But your baby won't even appreciate the bling in her mouth, so bypass the crystals for a more practical model instead. A good test is to ask yourself if you had the item as a baby. If it didn't exist a couple decades ago, do you really need it today?

7. Buying too much when pregnant, before you know what your baby will like.

Pregnancy is a good time to get your shopping done, because you're not yet limited by the schedule of an infant. But it's also prime time for making many shopping mistakes, since there's no way to predict the personality of your baby before he arrives. He might love rattles but hate stuffed animals, or gravitate toward a jumper but cry if you put a musical game near him. Wait until he can express his personality before stocking up on too many toys.

8. Skimping on toys.

Toys are another area where it makes sense to splurge a bit. It's tempting to think you can use regular household items as toys, such as wooden spoons or an empty water bottle filled with coins as a rattle. But toys must adhere to rigorous safety standards to prevent choking and other hazards. Regular household items, on the other hand, face no such tests, so might post hidden risks. The ridges on water bottle caps, for example, can be rough enough to hurt an infants' gums if chewed on.

9. Avoiding dreary topics like writing wills and taking out life insurance.

No one enjoys thinking about death, but preparing with a will and life insurance can help your family cope with tragedy. Financial planner Mark Colgan and author of The Survivor Assistance Handbook: A Guide for Financial Transition says he often sees people rush through decisions, such as selling their homes or shifting investment holdings, shortly after the death of their spouse. "Grief is so painful, they want to get it over with," he says. Preparing for various scenarios in advance can prevent such stressful decision-making.

10. Waiting too long to talk to kids about money.

Money Savvy Generation, a company cofounded by former financial services professional Susan Beacham, uses a piggy bank with four compartments--save, spend, donate, and invest--to teach kids how to budget. "You're teaching them to stop, pause, and reflect, and this is the first step toward teaching them to delay gratification," she says. Having everyone in the family, including adults, draw a picture of his or her goals, from pet gerbils to European vacations, also helps kids visualize the benefits of saving, Beacham adds.

Kimberly Palmer is author of Generation Earn: The Young Professional's Guide to Spending, Investing, and Giving Back.

Available at Amazon.com:

Lifecycle Investing: A New, Safe, and Audacious Way to Improve the Performance of Your Retirement Portfolio

Worry-Free Investing: A Safe Approach to Achieving Your Lifetime Financial Goals

Spend 'Til the End: The Revolutionary Guide to Raising Your Living Standard--Today and When You Retire

The Hard Times Guide to Retirement Security: Practical Strategies for Money, Work, and Living

Generation Earn: The Young Professional's Guide to Spending, Investing, and Giving Back