Becoming a parent means taking on a range of additional responsibilities. One of the key focuses is financial arrangements and considerations. With a lack of planning, thought, and organised processes, finances can easily slip and become unmanageable. This is not a tenable situation and should be avoided wherever possible, at all costs. This guide explores how to plan for the financial future as a parent.
Focus on Clearing Debts
Clearing debts is empowering, financially advantageous, and a smart move for any family. Aside from the obvious stresses, paying off debts can free up money for the future and for savings too. It improves credit ratings, which in turn makes things like acquiring a mortgage more attainable and opens the doors to lending should an emergency occur.
In terms of financial planning for the future, switching to an electric vehicle has many benefits. It should also be considered for a young adult’s first car as well. The advantages are laid out clearly in helpful guides on LV Electrix. This website is commissioned by LV Insurance company and has a core focus on all things about electric cars and associated topics.
Some key highlights to get the ball rolling include the fact that electric cars have no fuel payments to plan for, they require fewer maintenance and repair jobs, and you save on factors such as tax and insurance too. Overall, it makes more financial sense in the long term to explore EV options for travel and transport needs.
School, despite the free childcare advantages and educational value, can end up costing a fair amount throughout a child’s attendance span. Therefore, it is a smart move to plan for any associated bills.
- Uniform costs
- School trips
- School supplies
- Laptop device
- Reading materials
- Support payments
These are core examples of things you might have to plan for over the education years. Education doesn’t always end at 18 either, and further education is a continued cost to consider. Uniforms alone can be a term-by-term expense and if there is more than one child to account for, needs to be planned for in advance.
Things like school trips can’t always be controlled money-wise as these are sporadic and unpredictable depending on the nature of the excursion. However, a pot can be put aside for as and when they crop up. Further education is supported by student loan schemes but this is contingent on parental income and doesn’t always cover all the bases.
Tips for managing these expenses include having a dedicated saving account set aside purely for school-related commitments, shopping during sale seasons, and being well organised to stave off anything unexpected that may come along.
Create a Solid Budget Strategy
It will be much more difficult to stay on top of monetary responsibilities without having a proper budget in place to refer back to. Budgets should be updated regularly so they are a true reflection of current circumstances. They are an indispensable planning tool when it comes to managing money because they provide a method of clearly laying out incomings and outgoings and visually keeping track of where money is going vs. where it should be going.
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Extra costs can be added as and when it is needed and, savings should be written up as well in order to factor in everything accurately. There can even be additional sections aside from the main budget that factor in costs for each family member.
Take out Life Insurance Policies
Talking about what happens when we die is not enjoyable for anyone, let alone parents leaving behind their children. However, planning for such an event is an unavoidable eventuality every caregiver must face. Life insurance ensures that monetary aspects are all taken care of, should the unspeakable happen.
Plan Meals, and Stick to It
Food shopping quite literally eats up a large chunk of incoming salaries. Being organised is the key to staying on track. It is all too easy to buy food daily and spend unnecessary cash on snacks and suchlike. But going to a local store every day is a guaranteed way to drain resources and buy things that don’t need to come home with you. Consider setting out a specific meal plan for each day of the week and shopping weekly as opposed to daily. Some people prefer to make their meals bi-weekly; it is down to personal preference.
There are plenty of ideas to make this task easier such as thinking up favourite meal ideas collaboratively, working things out meal by meal, for example, breakfast, lunch, and dinner, accounting for snacks to avoid overspending at the local shop, and mixing up meal plans to avoid boredom. Leftovers are also your friend in this arena because most meals produce waste, so why not lean into this and use it to the benefit of the family? Leftovers can even be turned into a whole new meal idea if you get creative enough.
Have a Plan for Major Holidays and Birthdays
One of the biggest drains on money is major events like Christmas and birthdays. Fortunately, these can be easily planned for well in advance. Try shopping the sales and don’t be afraid to start making purchases early – there is never a wrong time to shop after all. Consider doing an at-home party for a birthday as this is much more budget-friendly. Shopping online often provides a better arena for discounts, vouchers, and online exclusive deals or promotions too. Some methods favour an accumulative savings process instead of advanced purchases, but often prices around key seasonal events are more expensive. Therefore, if the cost can be offset beforehand, it absolutely should be.
The last tip for Christmas, holidays, and birthdays is to avoid borrowing at all costs. Borrowing money, while a viable option sometimes, is not a smart move to pay for things like gifts. If you can’t afford it, don’t buy it and stand your ground to avoid a damaging future situation that is hard to get out of.
Build an Emergency Savings to Fall Back On
Consider the following scenario: You have lost your job, but the mortgage payment is still due. The bills are piling up, the children need new clothes and the car breaks. What do you do? This may seem extreme, but life does happen this way from time to time. Of course, it would be terrible bad luck but when such situations happen, there has to be a plan in place to avoid a complete meltdown and disaster. Taking out a loan is not always the right answer, and it is more practical to have an emergency fund at your disposal. Saving a little each month, even if when the time comes it is not enough, is better than having nothing in place as a security blanket.
Financial planning is an integral part of parenting. Families need a deeper understanding of the financial aspects of their life. It is one of the least talked about topics between couples, especially ones that are just getting established, but it should be one of the most talked about things in the spirit of being responsible and open in a partnership.