As parents, you want your children to have as much as you can provide for them. From buying them toys, clothes, or their favourite foods, you often see to it that your children can receive the utmost care, sometimes at the expense of your budget. This is a very common experience that Celia Brugge financial advisor, has noticed in her line of work.
Can you really blame a parent for wanting to keep their kids happy? Of course not, but disregarding the current state of your finances to keep your child content is ill advised. Still, even the savviest spender can be susceptible to the smiles of their kids.
Brugge says, “I have seen very smart clients who actually know how to handle their finances, but when they have kids around them, the majority throws their budgeting and spending restrictions out of the window.”
According to the latest research conducted by the US Department of Agriculture, an average of $245,000 is invested by parents on their kids by the time they turn 18. While that may seem excessive, many parents don’t realise that they are unnecessarily spending on a daily basis.
Know how much use the credit card gets
CreditCards.com reported, 48% of credit card users share their cards with a spouse or partner, so it’s not an unusual practice is the US. But sometimes your partner use your card more than you authorized them to do so. This can impact your family’s budget badly.
Only 5% of kids have an access to their parent’s credit card or you can say that their cards are linked to the parents’ account. Children don’t have an ability to think beyond therefore he or she can overspend, leaving your financial weak.
The top-notch member of the American Institute of CPA’s added, “ The most important aspect of allowing your child to use your credit or debit card, is to set certain parameters within which they are bound to spend. For example, you may set up warnings or alerts to get notified when high spending occurs without your consent,” says Leonard Wright.
Children unexpected expenses
All the parents must agree to the fact that with children, many unexpected costs arises. You cannot imagine how a minor expense can become exponential. To meet these unexpected costs, it is important to have a balanced monthly budget. Out of your budget, deposit a little portion of your retirement account to keep your retirement plan save for future unexpected events.
Know about your overspending.
The more both owner and spouse knows about the family finances, the less likely anyone will overspend. Brugge suggests, “Both of them should sit down at least once a month to discuss their family expenses in the form of a balance sheet.”
Elder care can affect family finances
According to Pew Research, nearly 1 in 4 say their parents are older than 65 and they need care, whereas, 79% of them needs financial help from their children. “These elderly expenses can leave a family budget in disarray if one is held responsible for looking after everyone,” says Brugge.
But she also advises children to seek strategic advice to better manage their finances. Meet experts such as elder law attorney or elder care manager (Geriatric care management) for elderly citizens to properly meet their long-term needs efficiently.
She added, “Finding the right help for your elder parents allows you to better manage your family finances.”