Sophie Burton, Communications and Marketing Manager at Simplicity shares 5 things smart parents know about money.
1. It’s important for the kids to hear you talk about money
Involve your kids in positive yet honest discussions about saving, spending, giving and investing. Inclusive conversations about money encourage mutual respect and openness within families. Kids don’t always understand how money ties into their everyday lives, but regular conversations can help to build connections between what they have and how we work to get it.
2. You can make money grow and work for you
Just like how you mastered the art of a cheese toastie as a teenager and graduated to (maybe) perfecting a roast as an adult, there comes a time to shift gears from knowing how to make the humble savings account balance go up, and not down, to learning how to invest for your family’s future prosperity.
Start with retirement, and get to know KiwiSaver. If employed, make sure you’re matching your employer’s contributions and are in the correct fund to suit your time horizon and risk tolerance. Making small changes and tweaks now makes a huge difference to a KiwiSaver balance over the long term.
3. Set and forget
Family life can feel hectic enough without using up precious evening or weekend time for financial planning. The upside? Carving out chunks of time for financial planning actually saves time over the long term and reduces stress. Once you’ve done the work, you’ll know how much money outside of fixed costs (rent/ mortgage, food, utilities) can be set aside to achieve long- term financial goals. Set up automatic payments each week or month. The money is whisked away before there’s time to notice it – don’t see, don’t spend! This could look like a regular payment into an investment account to pay for your child’s future education. Make sure the amount is achievable within the boundaries of your household’s income and spending commitments.
4. Having a will in place
Your financial life might be relatively simple, but every parent should still have a basic Will in place. A Will’s most basic function ensures that in the event of your death your wishes are heard. With no Will, your loved ones could end up in a complicated court process to have someone appointed to distribute your assets. You can get an inexpensive Will online by using a company like My Foot Print or through a lawyer.
5. The price of modern parenting
We can’t anticipate every potential cost of raising children. Life happens and a money buffer will help cushion your family over the bumps. Sounds great in theory right? Emergency funds can be daunting to put into action, so it’s best to start small, automate if you need to, and aim to eventually have a few months of bare bones living expenses set aside.
