Having your children young is a blessing in many ways, but it can also be stressful. Because you’re still settling into adulthood, raising a family without the financial security of a more established professional can be daunting. Luckily, there are plenty of tips and tricks out there to help young parents budget wisely and grow their wealth. These suggestions will help you tackle everyday savings as well as big-picture decisions that will impact your entire family.
Before you dive in, take a minute to assess your current situation. People who are struggling financially sometimes default to avoidance, but this is always a bad idea. While it may bring temporary relief to live in denial, facing your struggles head on will help you come up with a much more effective strategy. Even if things are difficult now, you can move forward and build a budget that is both practical and sustainable.
Create a Budget Rule for Your Household
Think about what your income allows, not what you think you have to save. In some cases, families can’t afford to put away 20 or 30 percent of their earnings each month, but that’s okay. Anywhere you can start to save is meaningful. Look at your current income and deduct all of the necessary monthly expenses. Out of what’s left, how much could you dedicate to savings each month?
You may decide that a 60/20/20 rule works better for you to start. Under this philosophy, you allocate 60% of your income each month toward living costs, 20% toward savings, and 20% for entertainment. A good budget should be detailed but flexible; the goal is not to restrict your spending or limit your financial freedom. The focus is on gradually increasing your wealth by maximizing the potential of what you currently earn.
Use Coupons and Shop for Sales
Coupon apps are an easy way to save money when you buy household essentials. Even larger purchases can be discounted if you look for deals online first. You should also plan ahead before heading to the store. Look at the weekly flyer and see what’s coming up on sale. Plan your meals and spend accordingly to get more for your money.
Stay on Top of Your Debt Management
Rather than settling for the minimum requirements, see how you can make the debt more tailored to your needs. Having student loans outstanding for decades doesn’t have to be unbearable. You can refinance student loans through a private lender and lower your monthly bills while dropping your interest rates. Explore all your options, and don’t be afraid to negotiate with lenders, either. You may also try snowballing smaller debts rather than letting them pile up. Even if something is only a couple hundred dollars, it can wind up costing almost double its cost if you let too much interest accumulate.
Ask Family Members for Help
A lot of new parents who are in their early 20s want to avoid asking for any type of family support. Letting grandparents, aunts, and uncles help you out with childcare does not make you any less independent. Especially if you have plans like sending kids to private school at any stage, which requires you to be able to both work, and save money now.
If you both work, then having a grandmother or grandfather watch the baby while you’re away is far more affordable than childcare. Instead of paying $50 for a babysitter, see if a friend or relative can watch your little one for a few hours when needed. If you have relatives with children of their own, let them know you’re happy to take old toys or clothes their babies have outgrown. This is an easy way to save money. Children grow quickly, and there is no reason to waste hundreds of dollars on clothes they’ll only wear a handful of times. When you’re done with them, pass them on to a friend or donate them to charity.
Skimp on Subscriptions
Netflix, Hulu, AppleTV, Spotify, and the like can all quickly add up. Some people forget they even signed up for an app and pay $10 to $25 a month for a service they never even use. Check your bank statement every week and look for any surprise expenses. If you have a subscription that you don’t use often, ask yourself whether it’s really worth the cost. You may think $9 isn’t so bad, but over the course of a year, that’s $108. Make sure you weigh both the immediate value and long-term return on investment for anything you sign up for.