11 Family Finance Tips During the Pandemic
11 Family Finance Tips During the Pandemic
Trent Hamm, Aug 3, 2020 Founder of The Simple Dollar
In this week’s reader mailbag, we’re talking about families, particularly financial issues involving children and parents. This is a topic near and dear to me as a member of the “sandwich generation,” meaning that I simultaneously have young children at home as well as parents and in-laws who are already retired. Most of the questions in this mailbag deal with those challenges.
1. How much should we save for having kids? 2. Caring for a parent without retirement
3. Managing kids’ virtual learning while working 4. Saving for college without stocks
5. Setting “rent” for in-laws 6. Making inexpensive school lunches at home
7. Kindle Unlimited for daughter 8. First pet for a child 9. Cleaning out parent’s stuff
10. Returning to a job after a year 11. Cheap healthy kid-friendly food
Q1: How much should we save for having kids?
I’m 29, my wife is 26. We have been planning on having kids in our early 30s and decided a couple of years ago to get our finances straight. We are trying to decide how financially stable we should be before having kids. Is there a net worth level we should be aiming for, or some other measurement? – Andy
My experience with the finances of parenthood is that the most important thing you should build before having kids is a healthy cash flow. You should be spending significantly less than you earn before you have kids, on the order of spending 70% or less of your income on living expenses, monthly bills, and minimum payments on debt. That other 30% should be used for something wise, whether it’s extra debt payments, saving for retirement, building an emergency fund or saving for a down payment.
If you’re finding it difficult to make ends meet now before having kids (and all of the extra expenses they bring), it’s going to be doubly hard when you’re dealing with all of the costs that a baby introduces — child care, diapers, clothes and food. If you both continue to work, child care is going to be a big cost. If one of you stays home, that’s going to be a huge salary hit (recouped by being able to lean more into eating at home).
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