Raising children is not a walk in the park, any parent would attest to that. Managing a family's needs and wants with factors such as savings, pension, and budget can really be challenging.
Family finances are a subject of trial and error for many parents. It becomes very stressful for parents when despite working so hard to support their families, they never really seem to have enough money.
Let's face it: parenthood is tough. There is no one specific method for ensuring stress-free family finances for everybody. Hence parents may find themselves making the same money mistakes over and over again.
Here are some of the frequent financial blunders made by parents that can help you avoid some typical parenting money mistakes and ensure smooth financial navigation, whether you're a young parent, parent-to-be, or an experienced parent.
Many parents want nothing but the best for their children. Unfortunately, attempting to fulfill your children's every single desire might lead to a financial disaster.
As a parent, you must be practical. The fact that your friend or colleague’s child may have a tablet and a wardrobe full of beautiful designer clothes and shoes, does not mean you have to match that for your children.
Explain to your children how costly these items are and how other parents make more money or maybe have fewer expenses. You can however assure them that you will do your best to buy them gifts for special events, like on their birthdays.
Many parents do not appropriately prioritize their personal savings. This often leads to major money mistakes which many only realize after a crisis. Parents should aim at building an emergency fund to handle medical bills in an emergent situation, loss of income, emergency trips, or emergency repairs, etc.
You can correct this money mistake by including an emergency fund in your monthly budget. It doesn't even have to be a significant sum of money every month. You can start with as little as you and within no time, your emergency savings will be in good shape.
Remember, it's not just parents who should have an emergency fund, although having children increases the importance of having one. Ensure that your budget allows you to grow your emergency funds as well - you'll be grateful you have one later!
For whatever reason, many parents rarely sit down with their children and discuss the fundamentals of personal finance. But consider this: who will teach your children about saving, spending, budgeting, and responsible use of credit cards if you don't?
Teaching your children about financial literacy is as important as teaching them how to read, and write. Parents who do not devote time to their children's financial education may face major consequences in the future.
Avoid this money mistake by speaking to your children about money on a regular basis. You can start by teaching them how to make a budget, and allowing them to create a monthly budget. This will help them to learn how to save and attain their financial goals.
To learn more about how to raise financially responsible children, click here.
Children should not be used as an excuse for living in extravagance.
Due to society's demands that to be a "good parent," you have to give your children what you didn't have growing up - which isn't bad at all - many parents who make a decent living live paycheck to paycheck in order to finance unnecessary or expensive luxuries for their children.
For some parents, having kids would be an excuse to rent or buy a house that they can't afford comfortably.
Some parents may also choose to send their children to expensive private schools under the impression of giving them superior education when their income does not allow this while there are reasonably-priced alternatives.
There's absolutely nothing wrong with trying to provide your children with the best schooling and childhood experiences. The problem comes in when you push yourself beyond your financial limits, leaving you with little to save and invest for your future or retirement.
Assisting your older children in getting on their feet is not a bad thing especially if they are just getting started out in life.
However, if you are not vigilant, that "assistance" could morph into a never-ending cycle in which you will be stuck paying their bills or bailing them out every time they make a financial blunder or mismanage their funds.
Research by Merrill Lynch, a market leader in comprehensive wealth management and investment services dubbed; The financial journey of modern parenting: Joy, complexity, and sacrifice, shows that 79% of parents with adult children between ages of 18 - 35 provide them with financial support.
As a parent, resist the temptation to always fix every one of your children's money problems as it could also land you in financial trouble and may not exactly help them become less dependent on you.
This is another major money mistake that most parents make. Failing to work on your finances together as a couple may bring more harm than good to your finances.
While having one partner who is disciplined with their finances and another who isn't, could be a challenge, what's even worse is keeping your spouse in the shadows about finances or any purchases that you make.
Have you ever purchased something and told your child, "don't tell daddy or mummy?" Guilty much?
Hiding money issues from your partner can start like this with the tiniest of purchases and end up doubling into bigger purchases, with even poorer financial choices and mistakes if not dealt with early enough.
Some parents make typical money mistakes maybe because they are preoccupied with providing the finest possible lifestyle for their kids. As a parent; juggling the bills, supporting your family, saving, and investing, it's quite easy to make all or some of the money mistakes above or even more.
The good news is that you can correct these errors and proceed with your life on a better and solid financial ground. Talk to your children about money, be open about your finances with your partner, make retirement savings, create an emergency fund, among many others that are applicable to you.
Soon, all these financial mistakes will be a thing of the past.