How to Handle Increased Financial Obligations as Your Family Grows

There is little in this world that is more exciting than welcoming a new member into your family. However, this is a bittersweet experience for many since it can also bring along new financial challenges. As your family grows, you will undoubtedly need to find more creative ways of managing your finances and stretching out every penny. Here are some tips to help your family stay afloat as it grows. 

Break Down Your Income and Expenditure

The first step towards financial freedom as a growing family is to take stock of your income and expenditure. You should gather all of the information you can about where your money is coming from and where it is going. This will help you put together an accurate budget and identify areas you can save money. 

An excellent place to start is with your paychecks, receipts, bills and bank statements. Using these, you can determine precisely how much you are making and spending each month. Calculating your expenses can be a painful process, but it is essential if you want to have an accurate handle on your finances. 

If you don’t know where your money is going, it will be very difficult to save for the future. The best practice here is to look over your bank statements from the past six months to accurately determine your outgoings. Once you have this information, you can categorise it depending on how you want to track your spending. 


Determine How You Will Track Spending Going Forward

Now that you have an idea of your historical expenditure, you can turn the lens towards the future. A crucial aspect of effective budgeting is tracking expenses as and when they occur. The old-school way of doing this is using a pen and paper to note your daily spending habits. 

Thanks to technological improvements, tracking your family’s spending is now easier than ever. Modern innovations like mobile banking and financial software take the effort out of budgeting. These can be valuable for busy families. 

Whatever means of tracking expenditure you decide on, it is crucial to note all of your spendings. This means documenting seemingly inconsequential expenses, like a packet of crisps you might buy when filling up your car at the petrol station. In many ways, successful budgeting is a lot like calorie counting – it doesn’t work if you’re not honest. 

You should continue to track your expenses to avoid surprises about where your money is going at the end of the month. Doing so regularly over a few months will help you identify fluctuations and categories where you might be spending unnecessarily. Using this approach will enable you to average out your monthly expenses and put together a more accurate picture of your finances.


Set Some Goals

The hardest part of family financial planning is behind you once you have an idea of your incomings and outgoings. Now, you can begin outlining your goals for the future. Since you know where your money has been going historically, you can start to choose where you want it to go in the long term. 

One of the primary focuses for a family with children is education. So, you might decide that you want to begin saving for a college education for your kids as they get older. People tend to consider setting goals as things like moving into a bigger house or buying a more family-friendly vehicle. 

A good way to break down your financial goals as a family is to categorise them into short, medium and long-term plans. For example, you can budget for an exciting family holiday while still saving for the deposit on a new home. 

You must be realistic with your financial goals. This means that you should prioritise different future expenses depending on their importance to you and your family. This means that sometimes, your long-term aspirations might need to take precedence over short-term splurges. Additionally, you should always prioritise paying off any debts before spending on a new thing. 

You should also remember that your goals will undoubtedly change as time passes. As you and your family grow and develop, things like your income, circumstances and expenditure are likely to change. As such, you should ensure that your goals are flexible so you can accommodate any unforeseen alterations to your financial circumstances. 

Alter Your Spending Habits

Now you have a clear idea of your current finances and where you would like to be in the future, you can begin to change how you spend money. Adjusting how you spend money is a vital component of sticking to your budget and ensuring your family’s financial freedom in the future. 

Families’ financial situations are rarely stagnant, as new expenses crop up on a near-daily basis. As such, there may be occasions where you are spending more than you are bringing in. This might mean that you have to adjust the amount going towards your savings or even take from a savings account in some circumstances. 

While unforeseen expenses might not be ideal, they are an unfortunate reality of life. Thankfully, taking steps to understand your finances and plan for the future will allow you to cope with periods of increased expenditure without needing to resort to loans or overdrafts. 

You must stick to your planned expenses as rigidly as possible, which might mean sacrificing some short-term goals at times. For example, if you had been planning a family trip to Disney World and unexpectedly need to install a new boiler in your home, you should prioritise your spending on the most important thing. This isn’t to say that you can’t have a holiday (camping is always a good budget-friendly idea), but rather that you need to be adaptable in your approach to spending. 


Take Precautions for the Worst Case Scenario

You are undoubtedly aware of the importance of saving for a rainy day. If you don’t already, you should ensure that you put away around 20% of your monthly income into a savings fund. Some of this money can be used to save towards specific goals, like the deposit on a new home. However, another portion should go into a rainy day fund. A shocking number of Britons are one expected bill away from financial ruin, so keeping a backup savings account can save you from unexpected expenses. 

Job security is another area that young parents can struggle with. One day, everything is going well, and then the rug is pulled out from underneath you, and you can lose your job. It is important to plan for this event by taking out income protection insurance. This will protect you and your family from the risk of redundancy and provide an income while you get back on your feet. 


On the whole, a growing family can be exciting and daunting in equal measures. As such, having a robust understanding of your finances, spending and savings are essential to provide for your family in the long term. Therefore, consider following the steps detailed above to plan for financial freedom as your family grows. Ultimately, tracking your income and expenses and setting clear yet flexible goals will help you stay on top of your finances, even in adverse conditions.

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