Having a baby is amazing, but it’s not all plain sailing. Plan ahead now to make sure that managing the family budget doesn’t cause problems later. Here are tips for young families to managing finances well.
1. Cutting Budget to Help with the Cost of a New Baby
If you’re earning less as a household but have extra costs, something Is got to give. Think about where you could be making savings, it could be not buying new sofa or TV, cut takeaway food budget, or stop your gym membership. But first, discuss these challenges with your partner.
2. Make a Family Budget
Getting your head around a new family budget is not always easy. When there are only you and your spouse, budgeting meant not going out with friends when the money ran out each month. But now that the baby has come along, you have to be more careful with your money. Make a list of all your income and outgoings. And you will get a surprise about how some small things quickly mount up. Obviously there are the essentials, but you also see where you can cut back a bit. The bank balance still is not always pretty at the end of the month but you are able to put a little away into a savings account for emergencies.
3. A Problem Shared is a Problem Halved
Shared responsibilities like a new baby demand joint decisions around household budgeting. Talk frankly about money, don’t keep any financial secrets and there would not be any surprises. Set some ground rules, agree not to buy anything over a set limit, say Rp 500.000, without discussing it with each other first. Make time, household budgeting is important, so set aside regular time to discuss and agree money matters.
4. Manage Your Money in a Way that Works For You
There are various ways to split the family budget. Consider them all, each has its pros and cons, and decide which one suits your family and circumstances. If it doesn’t work out, try a different one until you find one that you and your spouse find works for you:
- Option 1, keep everything separate and split the bills equally. You each look after your own money but agree to either share every bill or for one of you to pay for some things, like the weekly shop, while the other pays for others, like the rent or mortgage.
- Option 2, share everything. If you’re open and trust each other 100% with money you can pool your household income in a joint bank account which then pays for everything.
- Option 3, divvy it up into mine, yours and ours. This way, you each keep your own account but also pay money into a joint account to cover household bills and family expenses.
- Option 4, take the personal allowance route. The main breadwinner transfers an agreed amount each week or month to their spouse. Any money that each has left over after paying for household expenses is theirs to do with as they wish, giving them some financial independence.