When it comes to raising children, getting smart with your spending is key to making your money stretch. Here are five budgeting tips every parent needs to know.
Take a long-term view
If you take a long-term view on things like school fees, you may be able to save money in the long run. For example, some schools will give you a discount (typically between 5-10%) if you pay the fee upfront at the beginning of the year instead of each month. While this may involve an extra cash outlay now, the net effect is that you have more money at your disposal.
Take advantage of compound interest
Saving a little bit over a long period is far more effective than putting away large chunks of money for only a few months. Think about this when it comes to long-term saving goals you may have for your children, whether you want to put them through a more expensive high school or contribute to their university fees. Being disciplined about putting away money each month means you can take advantage of compound interest, so you start to earn interest on the interest you earned, building up your savings at an exponential pace.
Face up to the truth
Children aren’t materialistic at heart – what really matters to them is that they have loving caregivers, a secure home environment and a predictable routine and structure. Be honest, consider the things you’re spending money on for your children. Are you buying them gifts or toys out of guilt or peer pressure? Once you’ve addressed this, you can cut out those unnecessary extravagances and stick to the basics. Another thing to forego is brand new sports equipment for second-hand versions and you can get hand-me-down uniforms from friends with older kids.
Plan for the unexpected
Ask any parent and they’ll tell you that raising kids is unpredictable. This goes for the financial side of things too. While you may have all your monthly expenses covered, things like unexpected trips to the doctor or accidents can arise, where you have to pay out of your own pocket. Having a medical aid plan, especially one with a savings portion, can help relieve a lot of the strain.
Keep it simple
After you’ve cut out the non-essentials, you can save money on day-to-day costs too. Set aside time to make homemade school lunches instead of giving kids money to buy food (you’ll be making them eat more healthily too) and cut out the juice – give them water only. Instead of taking your children to expensive adventure centres and shopping malls, spend time with them doing activities in your area that are free, whether it’s going to the park, taking them on a bike ride, to the beach or your local community pool. Things like teachers’ gifts can also be homemade – a batch of homemade cookies with a heartfelt card is even more appreciated because of the effort involved.
