Wednesday, 8 November 2017

A new child in the home typically changes everything from sleep habits and dinnertime to household costs and long-term budgets.

And while your everyday schedule will likely return to normal, your finances will be forever changed. That's why it makes sense to adapt your money habits with your family in mind. Here are five suggestions that could help you create a personal finance approach that benefits everyone.

1. Consider prioritizing retirement above college savings

Remember: There are no Pell grants for your later years. But there are numerous factors to consider when making higher education decisions, including which institutions make sense for your family's finances and the student's career ambitions, and whether the child will help pay for some or all of their college.

2. Talk openly about money

You can teach your children about budgeting, saving, investing, and living within one's means by removing the shame that can cloak personal finance. Share your own money mistakes — investments that didn't pay off, debt that got out of hand, purchases you regret. Explain taxes — as best you can. Try to drive home the importance of saving. Chat about your career successes and challenges. Explain why you chose certain brands or products at the grocery store.

3. Walk the walk

Now you know to talk about money with your kids, early and often. But do you practice those habits you are instilling?

4. Prioritize saving

If you can't really afford that Disney vacation, computer programming camp, or violin lessons, your money mindset — and family well-being — can quickly get out of whack. Debt and lack of savings can cause stress and put a family in financial peril. When friends' Facebook feeds tempt you to whip out that over-charged credit card, think back to your own favorite childhood memories. How many of them were made on expensive vacations or expensive after-school activities? How many were spontaneous moments with people you loved?

5. Remember your goal

You want to raise financially responsible and independent children. One way to do that is to give your kids an allowance, and make them responsible for budgeting and saving. These actions can instill a sense of responsibility for their own wants and needs. Try to help your children understand what you expect of them in terms of financial independence and at what age.

Your kids will appreciate these lessons down the road when they have their own household, and hopefully pass them on to the next generation.

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