A parent’s utmost obligation is to provide their children with a happy and secure life. To do that, it’s essential to ensure that you’re financially healthy enough to pay off all your familial dues and obligations.
From clinic check-ups to tuition fees, there are a plethora of expenses that a parent will have to add to their existing pile of debt obligations.
And this has yet to include the various purchases like toys and trinkets that’ll serve as precious playthings for your child to fondly cherish throughout the years.
Given that fact, it’s incredibly important for parents to be astute and systematic when it comes to handling their finances. Impulsive spending and excessive loaning should be kept at a minimum—especially if you find yourself strapped for cash at the end of each month.
But besides cutting out these money-draining habits, there are many other ways you can reduce spending and increase the money in your bank account monthly.
Without further ado, here are some financial planning tips to help you pave a comfortable life for yourself and your family.
1. Teach your kids the value of frugality
When saving money, it’s easy to get so caught up in your own saving habits that you forget how influential your children’s and spouse’s actions are too.
If their spending habits are working against the greater good of the family’s well-being, then sit down with them and explain how they can reevaluate their spending habits.
You don’t want to lay down all the family’s financial problems in great detail; keep it age-appropriate and communicate authentically.
As a basic principle, it's wise to foster a mindset in your children of being prudent with their finances. Start by lecturing on the difference between wants and needs. This helps keep them aware of things they buy impulsively versus things that actually provide value to their lives.
Furthermore, you can also encourage them to save their excess allowance money instead of spending them. You can give them a piggy bank and teach them the value of immediate gratification.
If you’re dealing with a rift in financial control with your spouse, deal with it while employing a balanced mix of gentleness and rationality.
Try to lay out the importance of funds for the entire family’s future needs. It’s important to communicate and listen to your spouse in order to find the best middle-ground solution.
By following these practices, your family can learn the value of money and not being materialistic, which can consequently lead to better financial outcomes for everyone in the household.
2. Encourage free or inexpensive hobbies
It can be tempting to buy a collection of toy cars or Barbie dolls for your children as they get older, but let’s be real: amassing a huge collection of toys can be a major money drain!
The good news? You don’t have to spend your life savings to enrich your child’s life and make it memorable. There are many free hobbies and activities that they can partake in that come at zero cost.
For instance, if your neighbourhood has a local park with a playground, consider bringing them there regularly to play. If they have neighbourhood friends that can accompany them, all the better.
No local playground? No problem. The great outdoors can be filled with wonderful places where your kids can have fun at no cost, like beaches, mountain trails, and gardens.
At home, encourage them to embrace their artistic side with a simple pencil and paper. You can even consider transforming household tasks into enjoyable activities for them, such as gardening and baking.
There are a wide variety of fun things your child can do, and at a young age, they should definitely explore these interests. By keeping them preoccupied with inexpensive activities, you can maintain and grow your finances while keeping your child happy—a win-win.
3. Use secondhand items
First-time parents know firsthand how expensive baby products can be, especially big, bulky items that take up space in the family house.
It’s common for parents to use items like cribs and strollers for two to three years tops, and then store these items in an attic never to see the daylight again. However, if you’re planning for multiple babies, don’t simply throw these baby products away. Baby number two can still use their older siblings’s old stuff if it still works.
If saving money is a priority, pass down old items to your next child as they enter new stages of life. This can give usable products a new lease of life, which can definitely help in protecting your savings for future needs.
Besides baby products, you can even hand down clothes and shoes to the younger sibling, especially if the children are of the same gender. This can save you hundreds if not thousands of dollars over a lifetime—which can be allocated to bills or future investments.
4. Create a family budget
There’s no better way to take control of your finances than by creating a budget. That said, it’s something you’ll have to update regularly: so be prepared to use this spreadsheet daily.
To create a budget, start by listing all your income sources—salaries, investment profits, bonuses, and the like. Then, list your fixed and variable expenses for the month.
Subtract your expenses from the income. That’ll be your savings for the month, which you can use for future expenses or investments.
A budget is a terrific way of tracking your finances and planning out your future financial goals. It can remove the guesswork of your remaining money at the end of each month, enabling you to save more and ultimately provide a more stable household for your family.
5. Use a high-interest savings account or time deposit
Investing your wealth is a solid way of growing your money. However, it can also be risky, especially if you’re unfamiliar with the nuances that surround the stock market.
The good news is that there are other options to grow your wealth, and they don’t require too much effort on your part either. This includes putting your money in high-interest savings accounts and time deposits.
High-yield savings accounts are specific bank account types that reward account holders with a higher interest rate (or annual percentage yield) than traditional savings accounts. This can translate to more interest earnings per month.
Time deposits offer higher interest yields than most savings accounts, making them an exceptional option to store a reserve for your child’s education. They do come with the drawback of being locked into the account for several years—which may be okay for college students but may not be suitable for adults. Look at this article from Westpac to determine how much savings you need depending on your age.
The value of this APY hinges on the decisions made by the Reserve Bank of Australia (RBA) and other economic variables, so it may be worthwhile to pay attention to these variables before putting your money into accounts, especially time deposits.
6. Automate your savings
Lack the time or discipline to carefully track your spending? Let your bank account do the work for you with the power of automation.
Automating your savings involves your bank setting aside a portion of your monthly or bi-monthly paycheck into a specific savings fund without intervention on your part. You set the percentages and terms. Most banks have this feature, and if you do, utilise it!
Automating deposits helps keep you from being tempted to spend after every paycheck. It also gives you a clear financial timeline when goal-setting, helping you adjust your behaviour as needed.
