How I did it: Steph on spending habits during parental leave
Your financial situation changes when you have a child and go on parental leave, which can mean changes to your pre-child spending habits! Find out how Crayon founder Steph navigated these changes and her top tips for spending during parental leave.
In our series How I Did It, friends of Crayon share their personal stories about how they tackled one aspect of their personal finances. While their journey is specific to their situation, we hope it inspires you to take action. Just keep in mind that, as always, Crayon and our guests are not providing financial advice.
Stephanie Pow is Crayon’s founder, a mother-of-two and reformed-spender-in-progress. This interview was conducted by Steph’s friend and Crayon collaborator, Penny Sheffield.
How would you describe your attitude towards spending pre-kids?
Growing up, a once-a-year splurge at Kmart was a highlight. I was fortunate to grow up in a financially comfortable household, just not one that prioritised things such as fancy clothes.
When I received my first decent paycheck at 17 years old, I bought a pair of designer low-rise skinny jeans (we can laugh about that now!). As my earnings increased, so did my spending on fashion.
What changed?
Having my daughter Louisa three-and-half years ago. Parental leave was the first time in my adult life that I did not have my own source of income.
Although my husband emphasised that his earnings were joint funds, I felt deeply uncomfortable spending the money on luxuries for me. I’ve long associated earning income with a sense of independence and identity. To borrow from Destiny’s Child, “The shoes on my feet, I bought 'em. The clothes I'm wearing, I bought 'em. The rock I'm rocking, I bought it. 'Cause I depend on me if I want it.”
At the same time, my priorities changed. I thought more about the future I want to build for Louisa and the career I wanted to carve out for myself, which is what led me to start Crayon.
You’ve highlighted two issues: your shopping habit and a feeling of financial vulnerability. I’m curious how you tackled them - let’s start with the shopping habit.
These are the tactical steps I took:
1. Top 5 Rule
The most beneficial thing I did was institute a ‘top 5’ rule. I limited myself to only buying 5 new items a year but with no dollar budget. It forced me to prioritise. For example, I’m partial to a good party dress, but the ‘Top 5’ rule made me question if I needed yet another dress that I had very little occasion to wear (pre-kids, I had a lot of dry-clean only clothes, post-kids it’s mostly machine washable!). I liked not having a dollar budget because I could buy better-quality pieces I end up wearing for longer.
Coincidently, I recently came across this research article on why limiting the number of times you do something, rather than how much you spend doing it, is more effective at reducing costs. It’s easier for our brains to track how often we do something rather than keep a running total of what we’ve spent.
2. Unsubscribe!
I unsubscribed from emails from retailers. I’m a sucker for a good deal, so whenever I’d get an email about a sale, I’d waste time endlessly scrolling through websites and spend money buying things I didn’t need. Getting something for “60% off” still means paying 40% of the retail price!
3. Slow down
Plenty of research shows that nudging people to pause often helps us make better decisions in many domains of life, and spending is no exception. I hardly ever buy anything on the spot now. If I see something I like in-store, I’ll make a note of it and walk away. If I’m still thinking about it in one week, a month or even six months, I might buy it then. The online equivalent is to put the item in the cart but not check it out. Things are never as scarce as the shop assistant makes them out to be!
4. Switch it up
Shopping was also a social activity for me. I was upfront with my friends about my goal to reduce my shopping spending, and we found other activities to do together, such as going for a walk. Every so often, I’ll still go shopping with a friend, but these days we’re much more likely to meet up at a park anyway because of the kids.
5. Aligning my spending with my values
I remember a friend saying to me, “If I had just had fewer big nights out, I could have done that big travel experience that I had always wanted to do.” I feel the same way about my wardrobe. While there are pieces I love and have no regrets about spending money on, I own too many items that are barely used - some even still have tags on them.
Morgan Housel - one of my favourite money writers - recently published a blog post on the deep-seated motivations that can lead us to spend money. It’s worth a read if you want to reflect on why you spend.
I went through the exercise of defining what’s most important to me. What do I value? What do I want my life to look like? And what role does money play in that? Once I gained clarity on that, it became obvious how I needed to adjust my spending.
Decluttering guru Marie Kondo suggests you start the tidying process by identifying the things that make you happy - in her words, the things that spark joy. I take a similar approach to money, especially when it comes to non-essential items. I think about how much joy a $1 spent sparks.
We all get an initial rush when we purchase something new. A chemical change occurs in our brains, releasing endorphins and dopamine that make us feel good in the moment. As good as that feels, that’s not the joy I’m talking about.
I mean lasting joy - items I’m going to treasure rather than things I regret about spending my money on. Joy is personal; no one can define which items spark joy for you except you.
Crayon’s Financial Baby Prep Program takes you through exercises to determine your values, look at your current spending habits and plan for the financial changes of having a child. Ask your employer if they offer the Program.
And what about the feeling of financial vulnerability?
What caught me most unaware while I was on parental leave was the feeling of financial vulnerability. I was very uncomfortable being financially reliant on someone else. Anyone who decided to step back from paid work or take a pay cut to change career tracks can relate to this.
I’ve learned that how a couple manages their finances can play a big role in how financially empowered each person feels in the relationship.
The foundation of a healthy relationship with money as a couple is the ability to talk about it. Over time, I’ve been more intentional about making space for those conversations. I live by my calendar, so often, I’ve been the one nudging my husband to book in time to chat about this. Sometimes there’s even prep work!
How we structure our finances can also make a big difference. We both have full visibility and access to the main accounts and maintain separate accounts for personal spending. Couples money coach Lynda Moore emphasised that each person needs access to “pocket money” - an amount of money you can do whatever you like. I recommend watching her talk (or reading the transcript) if this is a topic you’re grappling with.
And like everyone, it’s a work in progress for us too.
What about your kids' clothes? Are they the best-dressed girls on the block, or do you have tips on economising there too (especially when they grow out of things so quickly!)?
They have a few nice outfits, but their day-to-day wear is functional! My priority is that they feel comfortable running around, and I don’t want them to worry about keeping their clothes clean (there’s no chance of that at kindergarten, anyway). I like natural fibres because they are breathable and tend to last longer.
Babies grow so fast. The sizes in the first year are pre-term, newborn, 0-3m, 3-6m, 6-12m, and 1 year, so you’ll be cycling through at least three sizes in twelve months. Therefore, the items you need in each size will depend on the seasons. We were given a beautiful short sleeve outfit in size 0-3m, but because both my girls were born in the cooler months, my kids were too big by the time the weather was warm enough for them to wear it. The sizes as they age are by year (e.g., 2-year-old, 3-year-old), so you get more use out of those clothes.
Many well-known baby brands will have end-of-season or warehouse sales. I usually buy a size or two bigger in anticipation of the next year or so.
We’ve also been lucky to receive hand-me-down clothes. I recommend taking preventative measures with second-hand clothes in case there are moths. If clothes moths spread in your wardrobe, getting rid of them is an ordeal! You can do this one of two ways:
If the clothes can withstand the temperature, do a hot wash (moths are killed off at 48C+)
Freeze anything that can’t be washed at that temp (wools and silks can’t go above 30C). More instructions here.
And what’s next for you when it comes to shopping habits?
A good wardrobe cleanout! I’ve sold some items on second-hand websites, and there’s more I could potentially monetise. Plus, I’d like to donate what’s left of my old corporate wardrobe to an organisation such as Dress for Success.
Now for the important legal part: The information we provide is general and not regulated financial advice for the purposes of the Financial Markets Conduct Act 2013. Please seek independent legal, financial, tax or other advice in considering whether the content in this article is appropriate for your goals, situation or needs. The information in this article is current as at 19 February 2023.
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