Budgeting tips before starting a family

Young couples face challenges budgeting and managing their money. The stakes are raised when starting a family. If you’re thinking of adding to your happy home, consider these financial tips.

Be open about finances

“Young couples need to start practicing good financial management early in their relationship. Be open with one another about finances, and start living on a budget. Set up a savings plan for periodic expenses, such as insurance and car repair, but also budget for entertainment,” said Tom Sutton, professor of political science and director of the Community Research Institute at Baldwin Wallace University in Berea, Ohio.

Live frugally and invest wisely

“It sounds simple but it is the foundation for solid family financial management: Create and live a lifestyle in which you spend less than you make. Invest the resulting savings in low-cost instruments that outstrip inflation and reap the benefits of compound interest,” said Don Bower, professor emeritus and extension specialist of human development and family science in the College of Family and Consumer Sciences at the University of Georgia.

Rent vs buy

“Do you want to own or rent your residence? There are pros and cons to each option — don’t assume that you have to own,” Sutton said. “If children are part of your future, think about what kind of community you would like to live in with consideration for child care, schools, proximity to work and recreational opportunities. Will both parents work full-time? Factor in the costs of child care and your preferences for how much time you want one or both parents to spend with your kids. Having children also means needing to start saving for potential post-secondary education or vocational training expenses.”

Be in it together

“Learn to talk calmly about money. Work hard as a couple to find your shared values, so they can guide your financial decisions,” said Tim Kasser, professor of psychology at Knox College in Galesburg, Illinois.