You lead one life before you become a parent, and an entirely new life after you have a child. I should know because ever since I became a parent, everything seems to have changed.
And I am not talking about the time spent on diaper changes or sleepless nights that every parent grumbles about. What changed are my priorities.
Before I had children, I had priorities, but they somehow lacked the intensity of purpose that I now have. Parenthood changed my priorities, especially my financial ones.
There are a variety of reasons to alter your financial priorities after having children.
“Setting money aside for your children as early as possible will help you cater to emergencies, such as your child getting sick, quickly and effectively without draining yourself financially,” explains Carol Tompkins, a financial expert and business development consultant.
“Moreover, the funds can be used toward giving your child the best education that your finances can allow,” Tompkins adds. “Setting aside these funds is an investment into their future.”
There are a number of ways that parents cope with the changed circumstances, and each parent may find their own path to peace of mind and security. Here are three absolute musts that I believe every parent should focus on.
Shelter and Food
Paying my rent on time has always been a priority. It’s even more so now that I’m a mom. I sleep better knowing that my two toddlers are cuddled up in a safe and secure space. The premium that I pay for my apartment allows me to live in one of the safest cities in the entire country. The neighbors are kind. There is no noise, aside from the noise my twins create themselves.
Around 8.8 million renters in America fell behind on rent payments in 2020 during the COVID pandemic, according to a Consumer Finance Protection Bureau report. I will always do my best to make sure that I have money to pay my rent. Without that sense of a safe and private space for me and my twins, I would feel very unsettled.
If you have limited money or are in a desperate situation, you should always pay for your food and your mortgage/rent first.
As important as they are, the credit card bills, debt collectors, etc., can wait. Shelter and food for your family come first — then the rest.
An Emergency Fund
About three-quarters of people who were laid off due to COVID-19 would have been unable to come up with $500 cash, according to a survey by Simplywise. This is an alarming statistic.
The reason an emergency fund should be a financial priority for all parents is that you should always have extra cash on hand to take care of your children if something goes wrong — because something inevitably will.
In 2005, I went through one of the most excruciating periods of my life when Hurricane Katrina demolished my hometown. When so many people in Louisiana ended up staying in horrible hotel rooms, shelters, and even the Superdome, my family was able to stay in a bed-and-breakfast for several weeks until my parents could rent a small house.
My parents placed a priority on my brother’s mental health and mine. They didn’t want us to see the suffering and the chaos that surrounded us at that time. I’m glad they had a hefty emergency fund available to take care of our family when we needed it. Otherwise, the experience might have been much more scarring, as it was for many people.
A College Fund
Only 20 percent of parents frequently discuss “planning for long-term goals such as college,” according to a recent T. Rowe Price survey. It is important for all parents to have a plan in order to remain financially secure while paying for their children’s education.
College tuition is rising at an astronomical rate. In fact, the cost of attending a four-year public college has risen by 37 percent since 2008, according to a report by the Center on Budget and Policy Priorities.
That’s why it’s more important than ever to start a college fund and to start one as soon as you can — whether you open a traditional 529 plan, an education savings account, or make other investments that you can use when your kids are ready to go to college.
If you feel like you don’t have enough wiggle room in your budget to start contributing to a college fund, take a long, hard look at your spending. Even starting with $100 per month and increasing your allocation on a regular basis can make a difference over 18 years.
And since not all kids end up going to college, these funds could also be used to pay for a trade school or to pay for other needs to help them get started in their careers.
The Bottom Line
Ultimately, it’s important to take the time to assess your spending and make sure that the money you budget for your kids each month goes toward the financial priorities listed above. After all, doing so will not only make your kids’ life better today, it will positively impact your child’s future for many, many years to come.
