While generally considered a worthwhile undertaking, having children comes with a big price, quite literally. And without proper preparation and care, managing the costs of raising children is almost impossible.
Here are some money management ideas for parents to ease the financial pinch and help ensure the family’s future.
Plan Household Budget
The best way to plan and keep track of family expenses is by planning a household budget. List the family income, expenses for essential items and extras and see if what is earned is more than what is spent and vice versa. If there is more spending than income, make the effort to cut down on expenses and pay off as many debts as possible.
These days, the practice of doing household budgets is made easier through many free and user-friendly online budgeting tools designed to help people start and stick to their budgets. Check out bank websites or try the Understanding Money Budget Planner.
Invest Wisely for Children
As kids grow older, the costs of taking care of them rise, especially if parents are planning to support them through to university. Saving for children’s education does have to start early. While opening a junior savings account is a good start, parents should also look into non-cash investments such as bank shares or managed funds for the children’s future.
Investing in quality shares for the long term actually smooths over losses that may have occurred over the years. So it’s sound investment when it comes to children’s education, which can take years to complete. Talk to a financial planner about investing for children if possible.
Choose Flexible Investments and Loans
Families with children are bound to be hit by unexpected expenses from time to time. So do choose investments and loans that offer flexibility and allow their investors or borrowers to access them during emergencies. For instance, invest in shares instead of an investment property so that the investments can be sold quickly in a financial emergency or choose a home loan with a redraw facility when there is an urgent need to access the surplus payments.
Have Right and Adequate Insurance Cover
Young families with financial commitments and dependants should always have the right and adequate insurance cover. Important insurance covers include life insurance, which gives the beneficiary a lump sum payment upon the death of the insurance policy holder, and income protection insurance, which can protect a certain amount of the policy holder’s income if he is unable to continue working due to illness or injury. Other insurance policies to consider are private health insurance and trauma insurance.
It’s a challenge managing the costs of raising children. To ease the financial stress, some basic money management skills for parents will help. These include acquiring the knowledge to plan a household budget, invest wisely for children, choose flexible investments and loans as well as have the right and adequate insurance.