Seven tips to help you stay on top of your finances as your family grows.
Growing your family can be one of life’s greatest joys, but if you already have one or two children, you’ll understand that raising kids can be costly. To cope financially with having more kids you’ll need to balance your income with the increasing expenses.
Take a long-term view
When you understand the costs additional children can bring, you can be better prepared to meet them.
Calculate the costs over your kids’ lifetimes—page 9 of NATSEM’s Cost of kids report outlines the typical costs for additional children—stating that on average families spend $281 a week on one child, $232 on the second child and $193 on the third child up to the age of 24 years.
This is not to say however that the costs of larger families are not substantial, just that additional children don’t tend to cost quite as much, due to economies of scale.
Tips for making your money go further
Once you have an understanding of the budgeting challenges a growing family can bring, it’s time to get creative. Every little bit helps, so look for ways to cut expenses—you may even have some fun in the process! Here are a few ideas:
- Buy things once
When it comes to clothes, toys and baby equipment, put aside items you can re-use. Renewing items with a touch of paint or new fabric can create some personalisation for a new child without breaking the bank.
- Cut your bills
Look for ways to cut your bills. You may be surprised at how much you save by turning off appliances at the wall, using energy efficient light bulbs and only turning on the dishwasher when it’s full. Compare energy offers at the government’s Energy Made Easy website.
- Grow your own
You can have fun with the kids and save money at the same time by growing your own veggies. Try planting a veggie garden from seed—you may even want to add some backyard chickens and collect breakfast eggs with your little ones!
- Compound your savings
Set up a savings account and regularly deposit some of the money you save from cutting down your living expenses. It could help with education costs or a family holiday down the track.
- Call on others
With a bigger family, time for yourself will be valuable. Ask friends and relatives to babysit to save money and so you can do something fun for yourself now and then. Find ways other than cash to say thank you—return the favour or bake a cake for instance.
- Entertain kids at home
Come up with fun activities you can do at home or nearby—pack a picnic lunch and go to the park or build a cubby at home and invite friends over to play.
- Get some advice
Having a family usually brings a drop in income, as one or both of you take time off from work. Speak with your employer about parental leave, leave without pay and job-sharing options. Look into any government benefits you could be eligible for.
And speak with a financial adviser about the impact a drop in income will have on your super balance—the long-term effects can take years to recoup—and any insurance you hold inside or outside of super.
We’re here to help
When it comes to budgeting for your growing family, these online tools can help you manage your money:
- The TrackMYSPEND app at the MoneySmart website can help you understand your spending habits
- MoneyBrilliant’s website can help make family budgeting easier by giving you a complete picture of your finances and a safe spending limit.
Online source: Produced by AMP Life Limited and published on 22 October 2015. Original article.
Print source: By AMP Life Limited, originally published on 22 October 2015 on amp.com.au/insights