Time is the one thing every parent wished they had more of. Faced with a seemingly-endless list of daily duties – from packing lunchboxes and making beds, to sorting washing and doing the school run – it’s hard to find the head-space to think longer term than the coming weekend.
This day-to-day living has an impact on your finances, too. If you and your partner are continually surprised by how quickly you find yourself strapped for cash each month, it’s time to hone in on your day-to-day expenses. Only when you get your spending under control, will you be able to begin long-term financial planning for you and your kids’ futures.
Where’s your money going?
According to the ONS’ most recent Family Spending report*, the average household parted with £528.90 per week in the year ending March 2016. While home-related expenses made up a good chunk of that total, families also spent around £68 per week on recreation and culture; £56.80 on food and non-alcohol drinks; £45.10 on restaurants and hotels; and £23.50 on clothing and footwear.
Saving more money will require you to scrutinise your spending, ideally on a weekly basis. Look at where you could cut back and set a budget to keep you on track – there’s lots of advice available on how to do this effectively (family money-saving blogs are a great place to start).
How’s your emergency fund looking?
Life with young kids is unpredictable at best, so you need to make sure you’ve built up a decent emergency fund to cover potential mishaps (i.e. the washing machine packing in just before you load it with a heap of grubby uniforms). The Money Advice Service recommends* having three months’ worth of living expenses saved up.
Sorted? Time to think long-term…
When your kids are traipsing through the house half-clothed with remnants of dinner smeared across their faces, it’s hard to imagine them as mature adults able to fend for themselves.
But one day, you’ll be waving them off as they pull away on their first driving lesson. You’ll be among a crowd of proud parents watching them graduate from university. You’ll be helping them move into their very first home, and you’ll be fighting back the tears on their wedding day.
These moments may seem a world away, but long-term goals tend to cost the most; so you need to think of where you see your family in 10-20 years’ time, and begin the planning process as soon as possible. Here’s an idea of some average costs – bearing in mind they’re likely to rise by the time your babies become grown-ups:
- Learning to drive – Upwards of £1,300*
- University – £22,000 per year (tuition fees + living costs)*
- Wedding – £30,111*
- First-time buyer deposit – £33,960*
Of course, it’s not just your children’s goals you may want to help fund in the future, but also your individual ambitions and goals as a family unit. Perhaps when your kids are teenagers, you envision moving to a bigger house in the country with a bigger car. Or maybe you want to plan a family trip of a lifetime for when they’re a little older – or a trip for just the two of you when your kids have flown the nest!
Your next steps
You need to be thinking of all your future goals, whether they’re family goals or your kids’ goals; or short, medium or long-term. Prioritise each goal and calculate costs to make them tangible – then, you can get to work taking actionable steps towards achieving them.
Rather than waiting until the end of the month or year to see if you have any money left over, the trick is to invest regularly and consistently. Include the money you want to invest each month into your budget; that way you’ve already accounted for the money you want to put away. You may be living in the ‘here and now’ (particularly if you’ve young kids), but it’s important to take a step back and look towards the future.
In it for the long-haul
If your goals are long-term (i.e. at least 5 years away), you may want to look at investment options – like a Zurich Stocks and Shares ISA – to make your money work harder for you, to help reach your goals. Investing your money can be an effective way of building long-term savings; you could benefit from tax-efficient growth and potentially higher returns than cash savings. Remember that with investment comes risk – your investment may go down, and you may not get back the amount you invested.
Part of the nature of investing is giving your money as long as possible to grow, but also to smooth out the ups and downs of the market; by investing for a longer period of time, you give your investment more of a chance to recover from any fall in value.
Ultimately, investing can help you reach your long-term goals – and potentially secure a better financial future for your whole family.
Have a look at our investment pages for more info!
The Zurich Stocks and Shares ISA is provided by Sterling ISA Managers Limited, trading as Zurich. Sterling ISA Managers Limited, authorised and regulated by the Financial Conduct Authority. Registered in England and Wales under company number 02395416. Registered Office: The Grange, Bishops Cleeve, Cheltenham, GL52 8XX.
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