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Some might say that having children is priceless. Others might argue it’s the most expensive decision they’ve ever made. Regardless of what side of the fence you might fall on, there’s no doubt that having children is a game-changer when it comes to managing your finances.
Financial management practices and habits that you set when it was just you and your partner aren’t likely to be as effective once you add children to the mix. Planning and managing your family’s finances will certainly take some time—but it’s more important than ever.
Here are three tips to get you started:
Account for lifestyle changes
Most parents plan for things like formula, diapers, and daycare, but there are other financial aspects where you may need to make changes as well. Additional costs and lifestyle changes that you will need to account for are things like taking a vacation, going out to dinner, or even participating in certain hobbies. You will experience significant price increases with these activities when you add children into your plans.
If you can include these types of lifestyle factors into your budget without noticing detrimental drains to your bank account, then that’s great! These are experiences that your kids will certainly never forget and will help to make lasting memories in their lives. If these aspects are too taxing on your finances, however, you may want to find ways to cut back, like eating in rather than going out.
Plan for unexpected expenses
We love our kids, but we also know that they can (at times) also be quite destructive. Many investment purchases you may have already made, or will make in the future, like appliances, furniture, or other home interiors will likely experience some wear and tear throughout your children’s younger years.
Because some of these expenses can occur when you least expect them, it’s wise to establish an emergency fund or have some sort of budgeting plan in place. When it comes to your home, utilizing a home warranty can be beneficial, as it can be used toward home repairs or maintenance as needed.
Set aside funds for the future
As a parent, you’ll surely want to be a part of the major milestones of your child’s life, but many of these often come with a hefty price tag. If you want to contribute to your children’s college tuition, wedding budgets, or even car funds, it’s wise to start saving for these events as soon as possible. Be sure to put a bit of money aside each month so that it doesn’t have much of an impact on your overall expenses, but will also accrue over time until it’s time to send your child off to college.
Following these steps will help make sure your family’s finances are in good standing. As an added bonus, by actively managing your money, you’re also teaching your children good financial habits!