The daily reality of being a parent is one that costs money, from keeping your kids clothed and fed to making sure that you’re able to provide the best home for them, it’s not cheap to raise kids. However, it is important to take the time to set aside funds beyond your daily expenses and to make the financial decisions that are going to impact your kid’s life well into the future. Here, we’re going to look at some of those decisions and why they’re so important.
Ensure Your Family Budget Makes Room For Them
First and foremost, it’s important to create a monthly budget that has room for child-related expenses, from clothes to extracurriculars, birthday parties, and more. Tracking and justifying your spending habits now can make it easier to free up extra funds for your savings goals in the future. When you’re proactive, you avoid debt creep and gain clarity on how much you can afford to contribute toward long-term goals, like a family vacation.
Starting Basic Money Concepts
Kids as young as five years old can start to get financial concepts such as saving, spending, and earning. Set up a simple allowance system or a “save-spend-give” jar to help your child understand how money works. Trips to the store or family conversations about budgeting can turn into mini financial lessons. You’re not trying to make them count every penny, but to get more confident in learning more about financial habits down the line.
Start Planning For Their Education
The sooner you start contributing to covering your child’s education costs, the less burden it will be on them when it comes time. Savings programs like RESPs can benefit from state contributions and allow you to grow those savings tax-free. Regardless of what your child’s future plans are, these savings can be used for university, college, trade school, or other qualifying programs. Making this move before your child turns 10 gives you a solid head start on what could be one of your family’s biggest future expenses.
Build An Emergency Fund
The right savings accounts can do a lot to make sure that you’re providing where it’s most important. However, beyond the expected, the unexpected can be very expensive as well, whether it’s a surprise school expense or an urgent home repair. Building an emergency fund with 3–6 months’ worth of expenses helps cushion your family against financial shocks.
Start Planning For The Far Future
Beyond your child’s education, adult life, and first home, you need to think about what happens eventually, when you’re no longer around. You should take the time to review your life insurance and put a legal will in place by the time your kid turns 10. These steps ensure your child is protected in case something happens to you or your partner, from the financial stability of life insurance ot the assurance of guardianship and asset distribution that a will provides.
Start making room in your budget to ensure that you’re able to contribute to the financial goals above. They offer a clear path to how you can vastly improve your child’s future prospects.
