Master your family finance!
Having one’s own family is one of the most important steps in life both personally and financially. Although already the step from individual to couple finance management is big, as we’ve covered in one of our previous posts, founding a family is an even bigger change. Moreover, we’re not just talking about traditional nuclear families. The situation is even less simple for example with kids from previous marriages. But despair not – family finance can be managed with grace and fun!
Couples have several ways to deal with their home finance management, most basically divided, partly joint and joint accounts for their needs and savings. However, a family tends to grow many more joint expenses than just a couple’s household, especially with regard to children. In countries where higher education is not provided by the state for free, it’s often needed to save for their college from the beginning.
Not just for these reasons, we strongly advise having a joint account for the family’s expenses. It doesn’t need to be the only account and each parent can keep their own for personal needs. But having all the standing orders related to insurance, schools, extra classes or savings go from one account managed by both parents is usually the simplest and most effective solution. You should also consider a joint savings account for bigger planned purchases or emergencies.
While children are one of the great joys of our lives and we love them, we cannot forget the massive costs related to parenthood. Children don’t only need lots of clothes, equipment, hygiene supplies and quality food; they most of all need constant care and attention for the first months and years. Which parent should stay with them? They are various stay-at-home calculators which can help you in deciding which of the partners should stay home with the child and for how long.
“Putting the children first” is a noble thought but many people interpret it in a way that they should forget about themselves. That would be foolish; never forgo your own insurance and retirement savings. Find plans that enable you to support your children as well as your own well-being and safety. Even though it’s time-consuming, go through the possibilities on the market carefully, compare them and try to find the best combination of services. If you and your spouse are uncertain about it, consider consulting a financial advisor. The process can cost time and money initially but if you set up everything running smoothly at the beginning, you save yourself money, time and worries later.
If you or your spouse raise children from previous partnerships, make it clear at the beginning or your relationship whether you’ll financially support them equally, also considering alimonies from the other separated parent. It’s usually best for the children if both the parent and the step-parent support them and both have a say in their upbringing. In many families with step-children, tension arises when the biological parent denies the step-parent an equal role in upbringing of the child or the step-parent doesn’t want to contribute financially as much. Discuss it calmly and thoroughly before you run into an argument situation. You want your family as well as yourself happy and functional, so be reasonable and prepared to accept a compromise, but don’t let yourself be pushed somewhere you don’t want to be.
Kids’ financial education
One of the most important life lessons you can give your children is a good financial education. Explain the importance of saving, dangers and traps of debt, how credit works and other bits of what they need to know. It’s also helpful not to keep them from seeing how the household is run. Let them be aware of the utility bills, principles of saving for a family holiday or keeping emergency savings. Don’t dismiss their questions; try to explain everything in a way they would understand, accordingly to their age.
They should also learn that pocket money needs to be earned, especially if they demand more to be able to buy something sooner – their help should be adequate to their allowance. A few simple, undemanding tasks are enough: cleaning up one’s room each week, helping with the dishes or watering the plants… Encourage them to save the allowance. If it gradually becomes more than for what the piggy bank suffices, open them their own bank account where they can deposit their savings. Make sure they understand how saving works,
You should also set an example by living responsibly and keeping track of your expenses. Go through your expenses regularly and assess whether you really need all those things or services. Do you pay for the cable but only watch TV occasionally? Consider cancelling it and seeing whether you’re better off without it. Do you often eat out? Try more cooking at home. Do you subscribe to many magazines that lie unread on the table then? Drop them too. Live frugally but also keep what you really need or enjoy. Discuss these decisions in your family.
Simplify your family finance
Keeping track of all the household’s expenses, things to save for, insurance and retirement programs and more can be very demanding, especially if you don’t share all updates with your spouse and children and don’t have all the information at hand, conveniently in one place. Keeping all the updated information easily accessible for each family member can make a big difference in successful household management.
Wallet enables it by providing an option to share selected accounts (the expenses and income data), shopping lists and budgets with up to five family members. You, your spouse and children or grandparents can therefore take care of the joint household finance simply and efficiently. Try it! Enter the promo code FAMILY in your Wallet app and use the Family Premium version, a multilicence enabling the user to share data with others, for three months. The code is valid until Wednesday, so don’t miss it!