Being part of a young family just starting out can sometimes feel like an uphill battle as there are so many challenges that young families face. Some challenges are simply part of entering into an adult world as a responsible parent while others are ones that can simply be avoided.
How many of these can you relate to? I can genuinely say I’ve been here with four out of these five situations!
Too Much Debt
A common financial struggle for young families is having too much debt. Some of this is fairly unavoidable, as the debt from student loans can follow you into your thirties – but other debt is avoidable. A good rule of thumb is not to put more on a credit card than you can pay off in a month or two. Also, excessive car loans and mortgages may not always be the best thing for a young family. It is a good thing to keep in mind that many financial advisors tell their clients that debt should not exceed more than 40 percent of a family’s total gross income. Sometimes it’s best to save for a few years to put a larger down payment down on a big expense.
Whether you are working at a restaurant or at the corporate level, job security is often a concern. When one parent loses a job, the other is either forced to go back to work, or they are forced to live on one income for a while. This goes hand in hand with not putting yourself in too much debt – the more in your savings, the more you can survive a downturn of income.
Not so much a problem here in the UK but I bet my US readers will be able to identify with this one! Even with medical insurance, things can happen. Medical emergencies happen, and there is often a deductible. Also, many medical providers do not cover dental emergencies. When a child needs dental work and there is no dental insurance, this can easily put a young family into debt. Even if it costs a little more per month, it’s good to have full medical coverage (primary care, prescriptions, hospital coverage, dental, and vision).
Not Saving for Retirement
If you are lucky enough to work at a company that offers a great pension scheme or a 401k, take full advantage of it. Not saving for retirement may not affect you when you are a young family, but it surely can affect you as you (and your family ages). Also, if you start saving for retirement on your own or have your own pension or 401k in place then it’s available for you when there is a true emergency.
Not Enjoying Yourself
While the focus of these four topics has been save save save, it’s also important to make sure that you do enjoy the money you make. Set a little back each year for a family vacation because nothing beats getting away from work for a few days. Similarly, it’s important to enjoy the new car or house you just saved for.
We definitely struggled when we first started out together and there are so many things that I would do differently if I had my time over but ultimately, we made it through some hard times and we’re stronger for it!
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