Why a Debt Management Strategy is Important for New ParentsNov 30, 2016
Most parents are used to reviewing their action plans — whether it’s sleep routines, play dates or making decisions about their education, parents are always thinking about what’s best for their families. But what about what’s best for your financial security? Household budgets, debt management strategies and spending plans need regular review, too.
Canadians considering parenthood can prepare financially by creating a budget, getting help with debt and putting a post-baby financial plan in place. Then, be sure to schedule a regular review that considers the current state of your finances, what you could do differently, and how you’ll plan for the future.
With Financial Literacy Month in full swing, all Canadians can benefit from critically reviewing their 2016 finances. There are a lot of questions to ask: Did you achieve your financial goals? Did you seek help with debt and savings when you needed it? What are your objectives for the coming year, and how should you adjust your spending to meet them? What are the coming costs of starting a family?
What you need to know to prepare a post-baby budget
The Financial Consumer Agency of Canada (FCAC) has valuable resources and tips for Canadians considering parenthood — from how prepare ahead for a child to a financial checklist for after your child is born. Raising a family in Canada isn’t cheap. One online financial publication puts the average cost at over $250,000 just to raise your child to his or her 18th birthday — never mind post-secondary education costs. And raising a child is about more than teaching them to tie their shoes, say please and thank you, and brush their teeth. It’s also about preparing them the appropriate financial skills as they’re growing. The best way you can do that as a parent is to prepare yourselves, and that means brushing up on your own financial literacy.
Knowing your options can help with debt management
There’s no doubt that as parents, you’ll face unique financial challenges, some of which can put a strain on the family. That’s why it’s important to understand your best options for debt management. The FCAC website has a lot of information on the subject of managing your debt — it’s worth taking the time to do the online research. You’ll find answers to questions like: Can you get out of debt on your own? What if you need help with your debt? How does debt consolidation work?
Before you have children, determine what it will cost you to start and support a family, and begin living with those costs in mind. The financial shock of reduced or lost income if one caregiver stops working, diapers, furniture, clothing, and daycare costs will be much less if you start putting savings aside in advance. And the emotional adjustment of delaying your own spending gratification to support your new family will be much easier if you’ve budgeted for it and made the conscious decision to include those costs in your financial plan.
As your child and your family grows, each new year will bring new requirements and new milestones. Remember to schedule regular reviews of your budget to prepare for new costs as they arise. Starting a family brings with it great excitement, but also a great deal of emotional and financial challenges. Do your best to put an achievable debt management strategy in place and prepare your finances ahead of time so you can enjoy your new arrival when the time comes.
Starting a family? How are you adjusting your finances? Tell us on Twitter. #FLM2016