Let's face it. It can be very difficult to build wealth while raising a family. There are tons of needs and wants to be fulfilled with scarce resources. According to a study by the Economic Policy Institute, you need between $50,000 and $100,000 to finance a family with two kids and both parents. This is a struggle facing many average American households. Many put aside their savings in favor of their kids. Some even postpone their retirement plans so they can give their children a more luxurious lifestyle than they did. And while it's OK to want to put your family's welfare before yours, financial experts warn that it's not always smart.
It's crucial to build your wealth while raising your family. And if you're wondering how to do so, read on.
Revisit Your Budget
Whenever you find it difficult to save money, it's wise to take another look at your budget. The aim here is to make sure that, regardless of your financial situation, saving should not play the second fiddle. Without putting savings in your budget, it will be impossible to identify the expenses to sacrifice to build wealth. So revise your budget and share it with your family. You want all your loved ones to learn to save and share their thoughts.
Set Goals, Start Small to Build Wealth
After revisiting your budget, it's time to set financial goals. But don't do it like everyone else. Many people set big goals. While there is nothing wrong with such goals, they can be unrealistic and unattainable, something that discourages many people. If you don't want to be the next on the list, be bold enough to start small. This strategy can be very helpful if your finances are tight.
Start by saving $20–$50 per day. Put them in your savings account. When you see them grow, you will be encouraged and inspired to build them up.
Prepare for the Unexpected
Many parents who end up in debt are not always irresponsible. They're not prepared for emergencies. So, as you watch your savings grow, it's wise to anticipate expenses before they happen. Ask yourself what would happen if you had to make that expensive trip to the ER? Do you want your kids to go to college? How will you meet these costs?
By anticipating expenses, you can prepare in advance. Start by building an emergency fund. Then move to long-term goals like saving for college and build wealth.
Learn to Say No
Many parents find it difficult to say no to their kids. While it may look like good parenting, many experts say that it can do more harm than good. It pays to teach kids that we don't always get what we want. That means learning to say no.
Apart from preventing you from dipping into your savings, saying no can help teach your kids to do things for themselves. They are more likely to become determined, creative, and resourceful. This will be very helpful as they grow and manage their finances.
Know When to Splurge
While it's OK to save, there are times when it's okay to reward your family. You just need to find a balance because you cannot say NO all the time. For instance, when you set goals with your family, celebrate after every milestone. This will help keep everyone motivated to achieve family goals.
Increase Your Income to Build Wealth
So far, we've mainly focused on how to save more money and make smart spending choices. Although these strategies are great, they can only take you so far. If you want to build wealth faster, it's prudent to think about how to increase your income as a family.
Build Wealth While Spending Money on Your Family
Many families in the past have embraced entrepreneurship, taken on part-time jobs, and others started side hustles at home. Find what works for you and your loved ones. More importantly, teach your kids about money by sharing your experiences along the way. Good luck!