Parenting and finances can be a daunting combination, but it’s time to face the ugly truth – children are money pits! Amidst the chaos of being a personal chauffeur between hockey, piano, and gymnastic classes, I am constantly worrying about what to feed my kids for breakfast, lunch, and dinner. With my three little ones, it feels like clothes and shoes are outgrown on a daily basis, and it seems like they are eating through my retirement savings. I also question my logic on getting two dogs. While there is tons of research to show that they are good for our mental health, they are certainly bad for our wallet. Despite these challenges, I wouldn’t have it any other way because my babies are my world whether they are human or furry creatures.
It’s not just Vancouver families that feel the stress of raising children in an expensive world; many parents around the globe feel the pinch. However, as an advice-only planner with over 13 years of industry experience, I can tell you that there is hope. Looking at pre-retired and retired clients gives me insight into what’s possible in the future. Here are a few tips for parents who are trying to navigate the world of parenting and finances:
- Start saving early! Time is on your side, so let your money work for you and take advantage of the power of compounding returns. This article is a simple example that shows the difference between someone who starts saving $100 per month at the age of 25 and 35. Stash away as much as possible before having children.
- Budgeting is key! With the help of a financial planner who specializes in cash flow planning, families can save thousands of dollars in interest costs by learning how to plan for big expenses. Don’t fall prey to consumerism, which can be bad for our soul, mental health, wallet, and the environment.
- Be cautious of insurance salespeople. Often, Universal Life or Whole Life insurance policies are sold for all the wrong reasons and end up taking away hundreds of thousands of dollars from clients’ long-term estate value. Seek a second opinion from an advice-only (fee-for-service) financial planner who can provide impartial advice that saves money in the long run.
- Don’t guilt trip yourself about slowing down savings when you have young children. Have a solid plan in place and enjoy your family time as much as possible. Clients usually significantly accelerate their savings in their late forties.
- Pay attention to investment fees! High fees offered by most mutual funds will eat up years of retirement savings. Separate investment and financial planning fees to make the most of your money. Here is my blog on this topic.
Krishna Pattabhi Jois once said, “Practice and all is coming.” This quote reminds us to take our time, be patient, and be disciplined when it comes to financial success. A financial planner can help in these areas and provide hope by showing the financial reality. A plan can bring peace of mind to some clients. Other clients need more direction and discipline. Your financial planner can serve as a good accountability partner and mentor.
Remember, children will grow up, and parents will see the results of their upfront investment during Thanksgiving and Christmas dinners, or other cultural holidays that are marked by big and beautiful family gatherings. In the meantime, let’s work together to implement prudent financial strategies and learn how to be disciplined. Good luck!
