Many families are concerned with their finances. They want to do everything possible to ensure that their children are taken care of and that they have a good financial future. Unfortunately, many families make the following mistakes when it comes to finances.
No Emergency Fund
Unexpected things that cost money will happen- a car breaks down, the baby needs an expensive medication or a toddler suddenly has a growth spurt and needs a new wardrobe. Even an unexpected $100 expense can send an unprepared family into a financial disaster. Because of this, it’s important to prepare for these expenses. Even families that don’t have a lot of extra money can put a little bit of money aside every month. These funds will add up and prove to be beneficial if an unexpected expense arises. It’s a good idea to always have at least $1,000 in an emergency fund for all of those unexpected expenses that arise.
Not Saving For Retirement
When you are in your 20s or 30s retirement may not be at the forefront of your mind. You may be so worried about your kid’s future that you forget to think about your own. This can leave you without enough money when it’s time to retirement. It’s important that you start saving today. If you aren’t sure how much money you will need to retire or where to put it at, it’s a good idea to meet with a financial planner. They will be able to guide you and help you come up with a plan to save for retirement without sacrificing your family’s needs.
Forgetting To Take Advantage Of Tax Breaks
One of the financial perks of having children is that you may be eligible for tax breaks. For example, a dependent-care credit can give you back quite a bit of money if you have a child in some form of childcare so that you can work. If you adopted a child, you may be able to get an adoption tax credit as well. When it comes time to file your taxes, make sure you are aware of these credits and discuss them with the individual that’s filing your taxes.
Spending Too Much On Your Child’s Activities
We all want to give our children every opportunity possible, but it can be easy to go overboard. Many parents go into debt by enrolling their child in every soccer, dance or music lesson that they can find. While these lessons can be beneficial, there has to be a limit. Sit down and go over your budget to see how much you can afford to spend to put your children in lessons every month. Make sure you stay within that dollar amount. If you can’t put your child in a particular class because it’s too expensive, don’t feel bad. No child gets to do every single class or lesson that they want too. If you are absolutely set on them participating in a certain lesson or class, try to find a way to make it more affordable, such as volunteering your time as an assistant to lower the tuition.