How has having children affected your finances?

Question

Are you able to save for retirement and normal everyday things, pay your bills on time, have the disposable income to do the things you want and finally have 6 to 8 months of living expenses just in case you get canned from your job?

Answer 1

Having a baby has changed our budget. I am a stay at home mom now, so we only have my husband's income. We make enough to pay all our bills, buy groceries, buy a few toys or clothes here and there as needed, and work on our house. Some months we don't get anything put into our savings account, but every paycheck my husband puts a percentage into his 401k. My daughter also has a savings account and we sometimes can't add to it each month, but we do our best. We adjusted our budget when she was born and we have made cuts to our personal spending. I don't buy expensive salon brand shampoo anymore, we don't eat out more than 1 time a week, we don't buy clothes for ourselves unless absolutely necessary, etc.

I assume you are asking because you are considering a baby. Before getting pregnant, go over your finances and do test adjustments for items like diapers and formula and baby food. Reevaluate what you spend on yourself too, quite often after you have a baby you stop wanting to buy things for yourself, you want to put the baby or the kids first.

Answer 2

Maybe. It depends on how much you make and your expenses. I have 2 kids (8 and 12) and a $3000 mortgage. We do have some disposable income and a decent amount in our savings account. BUT, I am careful in parts of my life so I can have extra spending money. 75% of my shopping is sale items (food and clothing) and that saves us literally thousands of $$ a year.

Answer 3

Having children has affected my finances by taking away my income.
We are still able to put some money away every month on my dh's salary, but things are tighter than they used to be thats for sure.
When the kid are older i'll go back to work and then we'll catch up.

Answer 4

My husband and I just had this conversation last week. The whole cost per month of raising a child in our income class is about $600 per month for two. That includes extra power, water, food, etc.

Answer 5

Yes. And one key to that is that we don't have any credit-card debt, so none of our money has to go to paying for crap we thought we couldn't live without. But probably the single most important thing I did was to have my 401(k) contributions deducted first -- not only does this give a tax break, but more important, it means we have to solve for our budget using the money we've got, AFTER saving for retirement.

Another big change has been using a personal finance program (I use Quicken) to manage our finances. It's MUCH MORE than just keeping track of what we spend and where -- the REAL power of a program like this is in "scheduled transactions." I have my whole financial picture sketched in through the end of November (it's late September as I write this) -- I can look in Quicken and see what my projected balance is going to be at any date between now and two months from now. This is because the bills that are consistent are already 'deducted' (in the future) for the amount I know they'll be; bills that vary are deducted in a typical amount; and the amounts we spend on groceries, dining out and other stuff is "deducted" every week. So I can see where I'm going to have a tight week, where I can move a bill a few days later to make it work, and when we have to take a few bucks out of the groceries or the dining-out budget to make it all fit.

It's a miracle, an absolute unbelievable miracle. And it's been two years since I've had a non-sufficient-funds charge from my bank, because I know MONTHS in advance when my balance is going to be tight.

The challenge is in keeping on top of things, especially with two of us spending money. Since it's nearly all debit cards these days, I can download transactions from my bank and know how much my wife spends if she goes without me. I track that against how much we've budgeted for the week and we keep in touch on how much there is left at the end of the week.

So to recap, here's how you can get to this point:

1 - Contribute to your 401(k) if it's offered -- contribute as much as you can afford. Start with 4% or 5%, then add a couple of percent till you're up to at least 10%. It'll be painless, and if your company matches your contributions to any extent, it'll be amazing how quickly your money grows.

2 - Pay off all your credit cards. Start with the one with the highest INTEREST, not the highest balance or payment; that's your best leverage. Make a couple of minor sacrifices for a month or two (give up one Starbuck's a week or something...) to pay down your highest-interest account first. Then take the money you've been paying them and apply it to your card with the second highest interest. Then apply THAT, plus the first, to your third account, and so forth. By the time you get to the third or fourth credit card, you'll have a big chunk of change to throw at them every month -- and when they're all paid off, put THAT money into your 401(k)

3 - Pick up a personal finance program and use it religiously -- not so much for what you HAVE spent (though that will help at tax time if you use Quicken categories and TurboTax), but for what you are GOING to spend. Model the next two months and see where you have to cut back and where you might have some extra money; use that in either #2 or, once your debt is gone, put it into savings.

4 - Pay yourself first. Wherever possible, have money taken out of your paycheck and put into savings vehicles -- your 401(k) is the best, but any savings account is good. (And don't go with the plain old passbook savings at your bank, which is paying like 0.25% interest these days; you can get 4.5% or so on "linked savings accounts" from aggressive financial institutions.)

5 - Make financial management something you do all the time. It's like making dinner or taking a shower -- just because you did it last week doesn't mean you get to skip out from now on. :-) Seriously, we're all looking for some magic bullet that will just fix things for us, and for all but a few lottery winners that just ain't what's gonna happen. Know what you can spend, and spend that; know what you have to pay, and pay that. Then wake up and do it again.

And fundamentally -- it isn't about knowledge, it's about action. Knowing about managing your finances is like knowing about losing weight -- it does absolutely nothing unless you take the steps to make it happen, and keep after it.

All the best!

Answer 6

We were doing okay until my husband was downsized and my son started driving - the insurance is really a budget buster!

He must pay a portion of the premium.

Finally - it's the rise in gas, utilities and food prices that are ever increasing that really affect our budget.

Answer 7

Of course not. Children cost money. I just had to take an extra job to maintain a decent standard of living. But its all worth it to me anyway.

Answer 8

Yes. My husband makes a good salary and is wise with saving and investing. I am a stay home mom. We are not rich but we are comfortable. We have no debt except our mortgage. It can be done.

Answer 9

the children arent the problem other than food and clothes sometimes its the gas and bills that come with being a home owner that are ripping my wallet.

Answer 10

I'm not a parent, but I surely affect my parents finances.
I'm going through that phase where I "NEED" everything instead of "wanting" it.
Electronics, clothes, etc. is all I want.
Food and water is so basic.