Pre-kids, your financial to-do list might have focused on paying down hefty student debt, as well as saving for a down payment for a house, retirement, or a major one-off expense, such as a wedding.
Post-kids, paying for childcare, saving for post-secondary education, and a whole range of other expenses—from higher grocery bills to life insurance—put the squeeze on many families.
The key to healthy family finances is to balance meeting your short-term and medium-term financial needs with planning for the long-term. Just as importantly, you need a financial partner you can rely on to make that balancing act as wobble-free as possible.
1. Set specific financial goals
Having a clear picture of where you want to be is one way to take back control of your finances. Attainable goals help you make smarter financial decisions based around what really matters to you and your family.
Goals should be specific. Instead of just “saving for retirement,” what kind of retirement do you want? Mortgage-free? Lots of travelling? The more specific you are with your goals, the easier it is to plan appropriately. Goals should also be time-sensitive. Short-term goals might include paying off a credit card, or saving for that family vacation that you’ve always wanted. Medium-term goals are things like saving for your children’s education. For long-term, you might want to focus on retirement.
Here are some financial goal-setting tips.
2. Create a realistic budget
A family budget, a plan for meeting your financial goals, should be on top of your to-do list. Even if you already have one, you need to review and adapt it at least once a year as your family grows and your spending and saving priorities change.
The way you shape and create it is up to you (here are some templates you could try). What’s important is that you build a clear picture of your current income and expenses, and create a plan to meet your goals.
The first step is tracking all of your income and expenses for at least a month or two. This will highlight any areas to address. You might find that an unneeded magazine subscription, an unused gym membership, or the family’s takeout habits are eating up your budget.
Good budgeting is all about making smart choices and, if necessary, changing some spending habits (which is always easier said than done). Do you need a gas-guzzling SUV, or would a smaller, more fuel-efficient family car help you reach your goals sooner? It’s often the little things that add up.
Here are some budgeting tips.
3. Review your banking
Many people use their existing bank out of habit rather than loyalty. Why change? Canada’s big five banks focus on catering to an older generation that is often house-rich and relatively financially secure, with fewer expenses and higher savings. Families and younger people are down their list of concerns.
Who can cash-strapped families turn to with their financial wish list? The answer could be right in front of you. Community-focused credit unions are fast becoming the preferred choice of families in Ontario.
It’s not hard to see why. Credit unions, which are owned by their customers, or members, cater to local communities across Canada. This means that every member has a say in how their money is used, but also that members are eligible to receive dividends from the credit union profits.
Unlike the big banks, families are at the top of credit union’s list of concerns. Their “people before profits” model is evident in the desire of credit unions to create
affordable alternatives to high interest payday loans, like Windsor Credit Union’s “Smarter Cash” program. As well, the willingness to offer family-friendly mortgage products, such as Meridian’s Family and Friends Mortgage is just another example of how differently credit unions view their customers than banks do.
Credit unions’ people-first ethos extends to security. While banks only insure eligible deposits up to $100,000, credit unions provide unlimited coverage on registered deposits, as well as non-registered deposits up to $250,000 (from 2018).
When you bank with a credit union, your money stays in the community. It’s used to help local businesses and families like yours. Everyone benefits.
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