Overwhelmed by the demands of managing money as a parent? Although money is more important than ever, there’s no need to be stressed: With a little research and planning, you’ll have a hold on your finances in no time.
Focus on Communication
If you’re parenting along with a partner, it’s important that you’re both on the same page when it comes to spending. Decisions about how much you should try to spend per month on groceries, entertainment, and other costs should always be made together. Moreover, any unexpected spending should be speedily and openly communicated to the other partner so everyone is aware of the situation.
The reason for this is simple: If one partner is left out of financial decisions, it’s difficult to make wise choices as a team. This imbalance can cause feelings of resentment and frustration. Not only will this make managing your money harder, but it can also damage your relationship as parents and partners. Stay honest and open with each other and remember: You’re on the same side when it comes to managing your finances.
Do Your Research
One of the best ways to be prepared for the expenses that come with raising a child is to do plenty of research. Children are more and less expensive at different life stages. For example, the average middle-class family spends around $12,000 on child costs in the first year of life. A sense of what kind of spending you can expect at different points in your children’s lives will help you to manage finances year-to-year.
Some other questions you might consider:
– What are the average costs of childcare in your area?
– Are you planning to send your child to public or private school? Are you considering homeschooling?
– What are the costs associated with hobbies and interests your child has?
These are just a few of the parenting expenses you may be able to anticipate and plan for.
Plan For Good Times
One of the best ways to think about savings is setting aside money for the good times. Long-term savings feel more positive when you remember that they’re going toward a great goal, like saving up for retirement or ensuring your child has money to go to college. By attaching saving goals to their ultimate purpose and keeping that purpose in mind, you set yourself for success.
Even shorter-term savings benefit from having a specific, positive event attached. You can make savings goals for family vacations or home updates, both of which will have a significant impact for the whole family. Putting aside money year-round for things like birthdays and holidays will save you a ton of stress when the calendar rolls around to these often-costly events.
Prepare For the Bad Times
Happy life events give you something fun to plan and budget for, but you should also keep the harder parts of life in mind. For example, make sure your family has a sufficient emergency fund. The absolute minimum amount of money you should have set away for the unexpected is $500. However, the larger your family, the more you should have set away – ideally, enough to cover around six months of living expenses.
It’s also important to secure your family’s financial future in case you should unexpectedly die. Speak with a lawyer to make sure your will properly addresses your children’s financial needs, as well as clearly designates your intended guardianship for them.
This is also a good time to consider term life insurance, which guarantees a financial payout to your beneficiaries. Taking out this kind of plan will give you substantial peace of mind, since it lets you know for sure that your family will have financial help after your death. Life insurance premiums are typically locked in for the duration of the term, and the younger you are when you get it, the lower your quote. This means there’s no time like the present to take out a policy – but before you do, find out how much you can expect to pay by obtaining a quote.
The Big Takeaway
Parenting makes how you spend your money more important than ever. By focusing on communication and teamwork, staying informed, and preparing for the future, you can handle finances wisely and confidently.
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