5 Simple Ways New Parents Can Better Mange Money

Ah, the joys of having young kids. Sleep? Forget it. Dirty nappies? Get used to it. And as for having any money left over at the end of the month… well, hats off if you can manage it.

We remember having the same cane chairs for all of our kids’ first steps, which was just part of trying to support a family on a cadet journalist’s wage.

Of course, despite all of the sacrifices, kids still bring you more joy than you ever thought possible.

And trust us, after raising four of our own we can safely say you will get through it. So with the benefit of hindsight, we’d like to share five smart financial steps to take when you first have kids.

1. Budget for a more modest lifestyle


You probably don’t need to be told that your free and easy weekends are over for the time being, but that doesn’t mean you have to be home-bound all the time.

Spend some time making a budget that factors in your new family’s everyday expenses and household essentials, which will involve adjustments to your old lifestyle. This can be a bit of a shock, but will ensure you recognise any shortfalls before they become big problems.

Then see how you can arrange social and family engagements around a tighter budget, because mental health is just as important as financial health in a young family.

2. Review your insurances


While it may seem like an unnecessary expense, insurance protects you and your loved ones financially if something goes wrong.

So go through your insurance policies, including any held within your super, and ensure there is adequate life, income protection, trauma, health and home insurance to protect your family if anything happens.

As a general rule, you need enough insurance to support your dependents, cover debts and provide for ongoing care if you die or become incapacitated.

3. Get your estate in order


Updating your will is crucial when you become a parent, or if you don’t have one, then it’s the perfect time to tick it off your to do list.

One of the major decisions is naming a guardian for your child, but it also involves dictating where your assets will pass in the event of your death and naming an executor to administer the will.

While it’s possible to buy ‘do it yourself’ will kits, professional help will ensure that your will is legally binding and your wishes will be carried out as intended.

4. Build an emergency fund


Setting up your will and adequate insurances are both essential to guard against big, unexpected events. However, it’s also important to be prepared for the smaller financial headaches that life throws up too.

So start setting aside some money in an emergency fund. This is money that can be easily accessed in a financial emergency, like your car breaking down, an expected health bill or career change.

Ideally this will be six months’ worth of living expenses to cover your bases, but whatever you have now, the most important things is to start adding to it today.

5. Set up a savings account


Setting your kids up with the opportunities you want them to have starts the day they are born. And there’s no bigger help in funding their future education, sporting or social pursuits than compound interest.

So try to factor a small deposit into your family budget that goes into an account for your kids to access later.

Ticking this over will quickly add up. Say you start with $500 and add $20 a week, at an average interest rate of 4 per cent, it will grow to $28,300 by the time they turn 18.

If you’re starting a new family, spend some time making these financial changes to put your family in the best position for a bright future.

5 money matters that could save your marriage

When two people decide to walk down the aisle together, they’re probably not basing their decision on how financially compatible they are. At least we hope that’s not the case.

But once the dregs of the wedding cake have been thrown away and the honeymoon snaps are safely in their frames, how you deal with money as a couple becomes an important consideration.

Financial pressures can put a huge strain on any relationship and have led to the end of many a marriage. So here are five money matters that you need to learn to deal with together.

1. Be open about money


If you don’t form good habits early on in a relationship then the bad ones will stick with you. This means you’ve got to start out being open and honest about your financial situation as soon as things get serious.

You’ve already made the decision to spend the rest of your life together, so there should be enough trust to share things like your salary and any dirty debts you’ve picked up along the way.

Otherwise, that hidden income or concealed credit card will cause problems when it’s inevitably discovered.

2. Understand each other’s values and goals


It’s important for each person to understand what the other wants to achieve financially, both in the relationship and for themselves.

Don’t expect to be 100 per cent aligned on everything; there’s no right or wrong answer, and words like security, lifestyle and comfort mean different things to different people.

But once you’re on the same page it makes managing money so much easier, from everyday issues like choosing a restaurant to tough decisions like how much to spend on a house or where to send the kids to school.

3. Line up spending habits


If one person is squirrelling away every spare dollar while the other is consistently blowing their pay cheque on the latest ‘must haves’, sooner or later things will come to conflict.

This can be avoided by making sure your spending habits are compatible. A budget will help here, as will understanding each other’s goals.

We’ve met so many couples who, through being disciplined with their money and working towards the same goals, have ended up with more wealth than those who earn three or four times as much but spend the lot.

4. The joint account


While it’s certainly not essential to have a joint account, they can make the process of managing money simpler, more transparent and fair… Think splitting bills, buying groceries and paying the rent or mortgage.

And if you spend less time arguing about money, then you can spend more time enjoying your relationship.

To make a joint account work, a good option is to set up three accounts: yours, theirs and the joint account, with wages deposited into your individual accounts.

Then look at what you both earn and set up an automatic transfer for a certain percentage (to keep things fair) of each wage into the joint account each month.

If only one partner earns, you’ll need to work backward. Deposit the entire wage into the joint account first, then transfer money into each individual account.

5. Don’t be financially ignorant


For two people to jointly manage their finances, each partner must have a basic understanding of money.

Start by opening your eyes and ears to financial news… Daily newspapers, television, radio and books on money can all provide enormous help. For more complex matters, it can be extremely helpful to see a financial planner together.

By squaring up your financial relationship, you can avoid conflict later and build a brighter future together.