Posts

Pregnant woman putting money in piggy bank
Raising a child comes with a long list of responsibilities and a huge cost. In fact, the latest report from the US Department of Agriculture states that the average cost of raising only one child in American society, from birth to seventeen years of age, has been estimated to be nearly $233,610. However, when you take into consideration the impacts of inflation, this figure may easily exceed the $260,000 mark to raise a child born today.

Although you have heard that buying a house is one of the biggest expenses an average household makes, raising a couple of children is by far the largest than that for most Americans. For instance, if you add the expense of raising two or more kids and their educational costs, there are countries where you can buy two homes for that amount.

However, similar to preparing for buying a house, it might be a good idea to get your financial situation in well-maintained order before you choose to bring an infant into this world. In fact, it is your need to improve your money matters and do necessary bookkeeping when you already have kids and are facing financial hurdles. Here are five money milestones you should strive to cross before having children.

1. Ensure Career Stability

Establishing a solid and secure work situation is crucial before having children. While it can imply entrepreneurship, freelancing, traditional employment, or some blend thereof, you must have a firm foundation that not only supports your growing family but also helps achieve your financial goals.

Thus, work on a career path that can continue even after your kids are born. This money milestone of career stability should come with a salary that effortlessly covers the childcare expense that typically amounts to nearly 16 percent of the complete cost of a child’s upbringing, on average.

You have to consider more than just salary. For instance, a career that affords you advantages like healthcare and dental care, maternity or paternity leave, and a decent personal or illness leave policy so that you may take a day off easily to provide care for your ill child instead of being out of a pay day.   

2. Have Adequate Disposable Income

Certainly, $233,610 sounds a lot to just about anyone. But, when broken down to $1082 monthly, it makes a lot of sense. Calculate the estimated annual expenses of raising a child and take that into account when preparing your budget so that when the costs come rolling in, you’re prepared. This is your next money milestone that helps you make fine adjustments for your earnings as well as other variables that may affect your situation. This will also let you know the amount of disposable income required to be distributed for raising your children. In addition, it ensures you have sufficient savings to compensate for estimated variable costs.

3. Pay Off your Debt as Soon as Possible

Debt can be a huge financial burden in your life. If you fail to control it, eventually it controls you in many ways. Therefore, getting rid of debt should be your crucial money milestone that you strive to hit before having children. Aim to pay off the debts first on credit cards and others with a high interest rate. It is a good idea to do a part-time job to get some more income to eradicate your debt. It will not only improve your financial situation but also your credit score.

4. Make an Emergency Fund Available

Certainly, life is full of many uncertain events that may include unexpected loss of employment, a chronic health issue with one of your family members, or some other financial or natural disaster. All of these can miserably affect your living when you are not prepared for such events. That is why financial experts suggest having an emergency fund amounting to about three to six months of your living expenses, which you should also hit as your money milestone before having kids. Such a fund will protect and help you and your family in many ways during life’s inevitable messes.

5. Make Saving a Habit

One of the famous quotes by Warren Buffet says, “Don’t save what is left after spending but spend what is left after saving.” Thereby, your fifth money milestone should be to make saving money a habit before having children. In fact, start saving a sufficient portion of your income right away so that it does not affect your life. Simply aim to live within your means, considering your financial goals.

6. Contribute Towards Your Retirement

The cost of raising your children will increase as they grow. Therefore, your next money milestone should be to save for retirement to make your future secure and independent, before having kids. This is because, once you have children, you will have a harder time contributing towards your retirement fund, as other expenses will inevitably appear.
Check out America's Best Bookkeepers
About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual accounting, providing services to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks file and critical financial documents in an efficient and secure environment. Complete Controller’s team of  US based accounting professionals are certified QuickBooksTMProAdvisor’s providing bookkeeping and controller services including training, full or partial-service bookkeeping, cash-flow management, budgeting and forecasting, vendor and receivables management, process and controls advisement, and customized reporting. Offering flat rate pricing, Complete Controller is the most cost effective expert accounting solution for business, family office, trusts, and households of any size or complexity.

 

 

Mother wearing eyeglasses working at home office on laptop and taking care of her baby
In simplest terms, a family budget is a plan or statement that reveals how much income is generated and expended by an entire family. From necessities of life to comforts and from luxuries to bare essentials, a budget includes various items of both regular and irregular usage. Usually, parents are responsible for making a family budget since they have a wider experience in managing household tasks. A household budget is absolutely necessary for effective and optimal utilization of monthly paychecks. No matter how rich you may be, a household budget keeps your family going simultaneously while revealing the insights, i.e. how much money you are spending or saving on different aspects of life.  

No matter how much we may argue, most of the time we find ourselves amid severe agony and stark anguish in managing our family budgets. The ever-intensifying needs and irregular purchasing or spending patterns are the main reasons why we almost never meet our budgets. Sometimes, when we go shopping, we often end up buying more than our budget allows which disrupts all of our efforts in bookkeeping our money. Moreover, creating a budget is certainly hard and even much harder to follow because we often exceed our budget time and time again.  

Strategic Significance of Creating a Family Budget

Families all across the globe face extreme difficulties in managing their monthly paychecks. The reason is obvious; they don’t make a family budget. This happens to be a major blow to them in trying to save some money for their rainy days.  Besides saving them money, it actually drains their bank accounts which further creates a lot of problems. According to studies, more than 70% of people in America alone fail to meet their household budgets. This signifies that people nowadays not only need to create a household budget but also have to pay close attention and stick with it.  Only a balanced approach and a sensible mindset knows the significance of making a family budget and whoever does it successfully frees themselves from financial worries and anxieties. 

Whether you are an incredibly rich person or head of a small family, a family budget can help to save for the future. Whatever you save now will surely help you and your family in the future for meeting uncertain demands or necessities of life. It also helps to build a sense of collaboration among family members since all they work together to plan a budget that may serve as a financial guide for the entire family. Plus, creating a household budget takes time, mental effort and energy to get things right—the first time.

Tips that can help you Build a Workable Family Budget

Get Organized and Choose Your Budget Style

Before making a weekly or monthly household budget, you must know exactly how much money you can afford to spend in a particular month. One thing that has to be kept in mind before making your household budget is that you must set aside adequate time. You are probably going to make mistakes if you are in a rush. Moreover, you need to choose your budgeting style—whether you are going to use software or simply apply the traditional approach of paper and pen. However, it’s a lot more efficient to use electronic budgeting software instead of recording each and every transaction manually when making a family budget.

Evaluate Your Priorities and Set Benchmarks

Usually, necessities are always given a priority which will cover most of the budget. Once you have a good idea of your money, it will give you a clear snapshot of where it is actually going. You can then filter out details and see where you can cut costs. Bringing everything onto the table such as cash outflows, billing details, receipts or bank statements will help you know exactly where your money for the month is actually going. Moreover, your priorities must be dealt with separately as fixed expenses such as household rent, electricity and water bills.

Opt For Simplicity

Opting for a simple lifestyle will allow you to have greater command and control over the family budget. Whatever you are going to save for each month will increase your bank balance which means your future will not only be secure but healthier than ever. This way you can add up your savings, over time, and buy something substantial such as a new home, car, tuition expenses and other similar things.

Conclusion

Making a family budget may seem daunting at first. But, once you actually step into making one, it will come easier than you think. Fortunately, we live in an age where we have so many advanced electronic tools, software, and guides to make a household budget. By recording, monitoring and tracking the budget, you can determine where you can cut costs and save money for future needs.

Check out America's Best Bookkeepers
About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual accounting, providing services to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks file and critical financial documents in an efficient and secure environment. Complete Controller’s team of  US based accounting professionals are certified QuickBooksTMProAdvisor’s providing bookkeeping and controller services including training, full or partial-service bookkeeping, cash-flow management, budgeting and forecasting, vendor and receivables management, process and controls advisement, and customized reporting. Offering flat rate pricing, Complete Controller is the most cost effective expert accounting solution for business, family office, trusts, and households of any size or complexity.