Family life is a real joy but sometimes, having more mouths to feed and stuff to buy can mean that money is tight. As the old saying goes, money makes the world go around, and making sure that it works for you is paramount to achieving a comfortable lifestyle.
There may be no right time to start a family, but if you are worried about making ends meet once you introduce some little feet into your family, then thinking ahead to funding your goals is a good idea. Not only will you have a better understanding of the ways your money will need to stretch, but you will also have a financial projection that will probably last you for the rest of your life. How’s that for forward planning!
Stretching Your Income
If you plan to start a family, you need to prepare yourself for the extra cost of raising a child. In 2016, it was estimated that children born that year would cost their parents around £230,000 to raise to the age of 21, a cost of just under £11,000 per year. While this figure is slightly worrying, don’t forget that the bulk of these costs will happen when they are youngest and when they are preparing to fly the nest. The middle years are the cheapest at around £8,500 per year.
Rather than assume that you now can’t afford children – or even just one – use this information to think about how you will stretch your current income. Can you save on food shopping? Could you cut down on clothes or entertainment? You can get rid of all your going out budget! You will see that with a little bit of thought, you won’t be too far off your goal and as you progress in your career, you will be able to relax your spending again.
For a young family, the draw of quick money can be very tempting. However, before you make any decisions, and before you have the worry about feeding your family, take some time to understand how loans work, where the best deals can be found, and what you would need to do to make them worthwhile.
A site like Personal Loans Now is good for plenty of information – the good and the bad – about taking out a loan and what you need to think about. You might be cautious of taking out a loan, and rightly so, but having a good understanding ahead of time will be beneficial, whether you end up needing a loan or not.
Making Savings While You Can
If you know that you want a family, now is the best time to start building up an emergency fund. This is a savings account, usually containing around 3-6 months wages that can be used should a disaster happen. The most common reason to have an emergency fund is to protect against redundancy, giving yourself time to find new employment. However, there are all kinds of reasons that you might need to dip in, so having it there will make you feel much safer in your finances.
Once you have a young family, saving may not be as easy as it is now. There are lots of unexpected costs that go with having young children and so even regular saving might become a little more difficult. With that in mind, you should start building up your emergency funds now and continue to save as you are trying to conceive.
Many of the savings you can make will come as part and parcel of trying to start a family. You will probably want to drink less and may already be leaving your carefree days of going out on the town behind you in favour of a night in watching TV in your dressing gowns. This is no bad thing and is all a part of settled life, so do what feels good and reap the financial rewards!
Investing in the Future
Planning to start a family is really an investment into your future and will shape and alter everything you know. From where you live to the jobs you take, from what you eat to the social groups you move in, children have a massive impact on your life and the future you build together as a family.
Though you have not yet started trying, there is one final thing you should consider to get your finances in order: how are you going to invest to get the most out of your money?
For most families the house or apartment they choose is their biggest investment into the future. As a couple, you can handle being in a smaller space, possibly in the city, but with young children, the draw of the suburbs will begin to call with spaces for your children to play out and room for all the family to relax together.
Another large expense to think about is your family car. Getting young children in and out of the car can be mildly traumatic for everyone involved, and having a high car that is safe for children is always recommended. If you dream of having a soft top sports car, your family will definitely mean that the dream is put on a back burner for now. There’s a reason that cars go so well with the infamous mid-life crisis!
The last expense to think about – and this really is planning ahead – is setting up a savings account to begin building a university/moving out fund. Think of this fund as being a bit like a pension – you pay in just a bit each month and over the next 18 years or so it will gradually grow into a good pile. Even if your children decide not to go to university, having this kind of fund at that age is the perfect way to give them a real sense of freedom and responsibility, especially if you have already passed on your financial wisdom and know they will spend it well.