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Foolproof Finance

Track your cash
It's undeniable: Kids cost money. Your bundle of joy will need clothing, a crib, a stroller, car seat, toys, and around 3,000 diapers in the first year alone -- and that's all just for starters. To pay for all of this new stuff, the U.S. government estimates you'll spend $7,300 to $15,190 a year on your baby, depending on your income. That means you have to rethink the way you spend your money. And that means you have to find out how you spend it in the first place. Here are two ways to do it:

Are you detail-oriented?
Then you can budget to the penny: Gather a year's worth of bank statements, credit card bills, and receipts for payments you made on your mortgage, student loans, and insurance premiums. Add up what you spend on other necessities like groceries, utilities, and clothing, as well as discretionary expenses like meals out, vacations, movies, coffee, and gifts. Use a computer program like Quicken or Microsoft Money, or buy a cheap spreadsheet log, so you can keep everything organized in one place.

Or are you laid-back?
For most new parents, keeping track of every penny isn't realistic. Instead, estimate a rough monthly total of your major expenses (rent, mortgage, student loans, car payments, insurance, and utilities). Then decide what you'll pay cash for (parking or lunch, for instance), and withdraw a set amount from the ATM to cover it for 30 days. Pay for everything else with a credit or debit card so you'll have a record of your expenditures -- and a good sense of where your money is going in any given month.

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