I had a friend ask me how both Mr P and I have built our own businesses and saved money for our family home. It got me thinking that while I have always been interested in finance, and business in school and so has my husband that maybe numbers aren’t everyone’s thing. While explaining to my friend, she just kept saying, “they need a manual for people like me”. Yes, that’s true. We only learn things when we are guided the first time. It’s like learning how to walk, talk, and run from the start of life.
Saving is everyone’s nemesis at first. It isn’t always our first instinct to save, not spent when we get money in our hand. It’s hard to break old habits and realize how much money we waste on the little everyday things. But what if it’s something you dream of? Is it worth it than? I say, absolutely. Just like my friend who wants to own her own family home, she is learning how to change habits and save for it.
It goes without saying that starting a family is one of the most rewarding experiences in life. However, there is also no disputing that it isn’t a cheap exercise either, especially with today’s cost of living. In fact, it is estimated that the average cost of raising a child born in 2016 to the age of 21 is an eye-watering £230,000! I have two children that’s £460,000 if I go with 2016 stats. AHHHHH…
So I thought I share with you these six steps to family saving…
1. Have a proper family budget
The biggest issue with budgets is that they seldom work! However, with a bit of discipline and commitment to the cause, sticking to it really can save you plenty of pounds of each month. The planning process can be quick and painless too with this free online budget planning tool. The key is not to ask yourself “What’s the cheapest way?” Instead, the question to be asked is “What can I afford?” It’s the first step to living within your means as a family.
2. Free days out
When the family starts to swell, weekend activities can become incredibly expensive. However, why not take the kids to one of 180 free museums and/or galleries around the UK, and educate them along the way? In addition, there are also numerous schemes in place which offer kids sports coaching for free during the school holidays. Here’s a full list of cheap days out. We have really started doing more things local with our two kids to help save money.
3. Sorting out life insurance
It’s the very policy you hope will never need to pay out, but given that more than 1 in 30 children lose a parent before completing full-time education, life insurance is a necessary reality. But that doesn’t mean you can’t do it in a cost-effective way. Level-term life insurance is generally the cheapest way to go, but be sure to shop around and see what works best for you.
4. Childcare vouchers
It’s one of the best-kept secrets, but if you’re paying for childcare and aren’t aware of this scheme, it’s time to look into it. These vouchers will need to be offered by your employer, but most companies take part. Essentially it works like a salary sacrifice, and, by using them, you pay for childcare out of your pre-tax and national insurance income. So you give up some of your salary, but benefit in the way of thousands of pounds in tax savings. You can save up to £930 per year – per child – as a result. I have two children that’s £1860 out of that £460,000 above. 🙂
5. Stay away from high-interest debt
It’s easier said than done, but staying away from being dependent on credit cards is an important way to keep things on track. Credit card companies will often offer enticing deals to keep you spending, but, after a while, the interest can become paralysing. If you already have a large amount of money on your card(s), it may well be looking at consolidating your debts. Either way, keep the plastic to a minimum.
6. Smoking harms your wealth
The health risks of smoking are obviously well publicised. But it is estimated that you can save up to £35,000 over 20 years as a result of giving up smoking – not only due to the savings in cigarettes (no longer) purchased, but also savings on financial products such as life insurance. Kicking the habit has benefits all round!
These six points, along with many other cost-cutting winners, can really go a long way to easing the financial pressures of raising a family. It is possible for saving to become a healthy state of mind, without becoming an obsession. It’s just a case of ingraining good habits, and doing it early on. Once you’re on your way, you can then put your focus into the fun times and adventures with your family, safe in the knowledge your financial future is secure.
I have always been one to put a prize at the end of my savings. It was that expensive barbie doll car when I was eight that I saved my allowance for and than my first pair of flared jeans my mother wouldn’t buy with her own money. It continued on with my first car, my first apartment, and now, our family home. All throughout my life, I make targets and save for them. When one is achieved I move on to the next savings target. Yes, even retirement can be a target. I think with motivation at the end it has always kept me on track with my money.
What do you think? Do you use target incentives to save money or are you great at budgeting for a rainy day or emergency? I would love to know what you save for?