6 Things to Avoid when Managing Your Family’s Finances

Managing family finances is an essential skill for young couples to master, especially those who are expecting their first child. In fact, financial management not only affects a couple’s relationship, but also directly affects the future of the children.

Here are six common things young couples should avoid when managing their family’s financials.

1. Absence of a clear plan

You might think: “Oh, we’ve just been married, let’s just take it easy for a while and enjoy married life...”. However, many married couples who decide to have children find it hard to prepare for the costs of raising a child, which may include anything from visits to the doctor to their college tuition.  So, to ensure that the family is financially healthy, right after the wedding, you should immediately set up a financial plan for your family, even if it’s just you two. You need to take control of your spending and have specific goals.

2. Absence of an emergency fund for a rainy day

Not all things go according to plan, even when you have your goals pinned down. Unexpected things that could impact your finances, such as unemployment, loss of income, and illness could set you back. To guard against this, you need to set up an emergency fund to make sure you will always have enough to give your family the best life, even when the unexpected happens.

3. Lack of agreement on spending habits and plans

If a couple does not agree on spending habits and plans, one will always feel "upset” and "frustrated" with the other's spending. You also can't save money if your spouse is always spending beyond his or her means. Therefore, the first thing to do is for both of you to agree on a budget for both savings and expenses. For example, if you plan to have children, you need to plan an emergency fund specifically set up for them, such as a life insurance package that will help support them throughout their lives.

4. Failure to divide financial responsibilities between husband and wife

After the wedding day, the couple should discuss and clearly determine their financial responsibilities. For example, the contributions to the family fund (depending on the income of each person); assuming that the rent and utility bills are covered by the husband, then the wife should cover the groceries and savings, etc. If neither of you have accountability for the different expenses, both of you will be frustrated if faced with a serious financial situation.  

5. Failure to educate your children about the value of money

Children need to know about the value of money and how to save money from an early age. Depending on your child's age, you can turn this into a fun game, so that he or she can understand and appreciate the importance of saving money, and ways on how to do them.

6. Failure to prepare sufficient financial resources for your children's education

If you decide to have children, you need to consider their education even before they are born. This gives you more time to prepare for every stage until they graduate from college.  This also ensures that their schooling is not interrupted due to any financial difficulties that the family may face.

The sooner you start implementing your long-term financial plan for your children's education the better, as it is like an "armor" to help you protect your children regardless of what life may throw at you. It’s common practice around the world for young parents to buy a long-term life insurance product as a safety net, ensuring that their children will always have a sense of security to pursue their dreams.

More importantly, insurance products are also a sure-fire way to protect your children's future, should the unexpected happen before your children reach adulthood. If you still don’t know how to start, talk to a Financial Advisor today!