Quote of the Week:"If money go before, all ways do lie open."~ Ford, The Merry Wives of Windsor, Act 2 Scene 2.
Starting a family is exciting for the most part. You cannot wait to get started. But there is no hiding the fact that it can be, and it often is, daunting. The emotional and financial responsibility that comes with it frightens most people. But anybody can manage it if they prepare beforehand. Here is the financial foundation you need to lay before starting a family:
1. Talk About Money
Money problems is one of the most common causes of divorce. That may sound crazy, but doesn’t the old saying tell us that money makes people go crazy? Having different financial goals, spending habits, or even operating secret bank accounts can drive a wedge on your family. Lack of money can also cause stress which might affect your relationship.
Ensure that you are on the same page with your partner money-wise. Set common financial goals but also leave room for each individual to pursue theirs too. If possible, open four accounts; one for each partner, one for family expenses and a savings account.
2. Pay Down Debt
You do not want to start a family with a huge debt hanging on you. Reducing your debt burden will help you lower your already burgeoning financial burden. If possible, start on a clean slate.
The Author of ‘Your 33 Day Money Action Plan’, Nathan W. Morris once said that every time one borrows money they are robbing their future self. By extension, starting a family on the back of a huge debt is robbing them (the kids especially) of their future self.
3. Project Expenses & Budget For Them
This is perhaps the best way to figure out whether you are ‘family-ready’. Think about the type of life you want for them. Project the expenses you will need to provide them with that lifestyle then work backwards and ask yourself if your income can support it.
4. Set Long-Term Financial Goals
You want your kids to get quality education, or maybe you would like to retire early. Find out what matters to you in the long term then start preparing for it today. Set aside funds towards their education and get yourself a retirement plan. Starting early will save you a lot of stress down the line.
You do not need to be making an astronomical sum of money to have a happy family. If you are on the same page with your life partner and you manage your finances well, you will lead a happy and comfortable life. Following this guideline just before starting your family will give you a good foundation for that.