In Part 1 of our Science of Saving infographic series, we looked at a general break down of saving effectively and how to maintain a healthy mix of savings. Now, we’re focusing in on what it takes to support a growing family without going into debt.
It’s no secret – kids are expensive! The cost to raise a child to his or her first birthday is equivalent is equivalent to what you’d pay for a decent new car. Then you’ll spend just under a quarter of a million dollars to raise the child to 18. Is it any wonder that so many parents are struggling to get by?
With that in mind, saving up as early as possible to start your family can be a key factor in your financial success. The more you save now, the more problems you can avoid down the down.
The finance of going from one to two
The first step in financially supporting a growing family comes when you merge your finances with someone else after you tie the knot. When you’re on your own, your financial decisions are all yours – good or bad, the decisions you make with money only impact you.
With a partner in the mix, you need to adjust your spending and saving habits to strike a balance together. If one person is always trying to save, but the money is getting spent by the other, you’re not getting anywhere.
Start your family right by having an honest conversation about money before you walk down the aisle, and make sure savings is a big part of that conversation. You should also make sure not to set yourself up for financial failure right at your wedding. Plan a ceremony that fits the budget you have, and keep in mind that one day isn’t worth the financial stress you can cause with the price tag on a big wedding.
Managing money when there are extra mouths to feed
Another financial hurdle comes when you start adding kids into the mix. The mistake many couples make is not doing enough to save up in advance before each baby comes. When a new addition arrives in your house, it will have a significant effect on your budget. If you haven’t saved up, you can find yourself struggling – or even worse, racking up credit card debt to cover the gap.
If you want children, then make a commitment to start saving now even there’s still time before you plan on having kids. The earlier you can start saving up, the easier it will be when the new baby arrives. This way, you’re not worrying about money while dealing with the stress of no sleep from late-night feeding sessions.
Also keep in mind that the sooner you can start saving up for your children’s future education costs, the easier it will be. If you generate a healthy foundation of savings for their schooling, it will help you (and them) avoid the burden of paying back student loans.