July 2024 Newsletter: Your Finances & Parenthood
We Asked Our Team: What Are The Financial Implications Of Parenthood?
As the old proverb goes, it takes a village to raise a child. From teachers to caregivers, financial planners to community members, the advisors here at Hess Financial are proud to support growing families. We invite you to explore the financial implications of parenthood by reading what our advisors have to say about budgeting, saving, and investing for the future.
Stephan Hess
CFP® CDFA®
It doesn’t take much to throw your well-designed budget management system out of whack and lose those precious monthly budget surpluses you’ve worked hard to create. Add a child or two and most people get derailed for the next 20+ years. Don’t let this happen. You will eventually have a life after children, but you won’t have enough time to financially recover. If achieving other life goals or long-term financial security is important to you, then take a scalpel to your budget and deprioritize even more. It’s not easy but it can be done. Wear that frugality badge with pride.
Robyn Hill
JD CFP® CDFA®
My mother tied allowance to doing chores, required us to put half in our piggy banks (literally glass pigs) and expected us to buy anything we wanted, other than necessities. It was a good way to teach work ethic, budgeting and saving. But a few years ago, I met a parent in the grocery store who took it to a whole new level. She gave each child a shopping list and budget. Anything they had left over after buying the things on the list was theirs to spend or save, and she would match what they put in savings. What I love is that this teaches so many concepts in a very clear way: live within your means; needs first, then wants and wishes; shop wisely (don’t just go with the first option); and there are rewards for saving. I plan to use this with my grandchildren, if I ever have any.
Kevin Flint
CFP®
Remember the DINK (dual income, no kids) days? Say goodbye to that! The costs of raising a family add up very quickly, from diapers and formula all the way through car insurance and educational expenses. Creating and following a budget is critical to financial success at any age, but especially so when other humans depend on you for their survival. Becoming aware of these various expenses and more intentional with your spending will help ensure that there is cash flow available for the higher current and future costs that come with a growing household.
Sara Kate Garman
CPA
Despite not being a parent myself, I’ve personally witnessed family members undergo the transformative experience of raising children. It brings joy and additional responsibilities, including financial ones. Even with limited budgetary surplus, investing while your children are young can maximize compounding growth over time. Whether you’re saving for a future down payment, wedding, or college education, allocating any extra resources for investment can significantly enhance the power of your gift through compounding, providing greater financial support for your children’s future.
Derek Hess
CFP®
My wife and I don’t have any kids of our own (just three furry ones!), but as a peer to many other young parents there are a few common financial themes. What hasn’t changed is that raising a child is not inexpensive, and while many parents will joke about this fact, it’s becoming increasingly difficult to raise a child on top of all the other costs young parents face including the lack of available childcare, student loans, and rising housing costs compounded by high interest rates. Given all these financial challenges to starting a family today, it’s become much more important to build a solid financial foundation prior to parenthood.
