Becoming a parent almost 11 years ago was one of the scariest times of my life. I was still in college and had no clue what to expect or what I was doing. Essentially starting over again in 2020 with my daughters I still didn’t know what to expect (ahem, 10 week NICU stay), but at least this time around I was more financially secure. That alone alleviated layers of stress! Here are 3 money lessons I’ve learned that changed how I parent:
Expecting the Unexpected
With kids you can always expect something can and will come up last minute. Just the other day my son told me at 8:03 a.m. that I needed to sign a form and send in $10 with the form for him to take to school. He leaves at 8:05 a.m. Or how about that one time my twins decided to surprise us at 25 weeks and were born extremely early. In either case, both unexpected events had no effect on my finances because I have systems in my budget that prepare for emergencies, miscellaneous items, and upcoming known expenses. For instance, the $10 needed for school was not accounted for specifically in my budget. Over time, I learned to keep a line item for “miscellaneous” in my budget and cash envelopes. In the case of the twins, I had both an emergency fund of three months’ expenses and a sinking fund for maternity leave. Having these two forms of savings during that time allowed us to focus on recovery and our family without the stress of how we would be able to pay bills and childcare for our son.
Preparing for Our Kids’ Future
My husband and I had very different experiences when it comes to how we transitioned into adulthood financially. My husband funded 100% of his college education with student loans and worked to purchase his first car after graduating college. My parents paid for my college education and bought my first car when I was 17. Having lived through two very financially different experiences, we decided that our goal was to ensure our children are financially prepared for adulthood and would have debt free starts. One way we do this is by funding 529 plans for our children, which allow us to save and invest money now to be used for qualifying education related transactions. A question we get often is, “What if they don’t go?” which has led us to consider other ways to prepare for their futures. In addition to traditional savings accounts and 529 plans, we also have UGMA accounts which allow us to invest on behalf of our children, and the money can be used for anything in the future. If their future dreams include a gap year of travel or taking the leap with a startup, we want to make sure they don’t feel limited due to finances. We’re using EarlyBird to make these investments in their futures. What I love the most about EarlyBird is that we are able to invite our friends and family to contribute to their accounts while also leaving video messages with their gifts. It’s like creating a time capsule so that the kids will receive messages and memories in addition to their monetary gifts. You can begin your investing journey for your kids today by opening an account with EarlyBird, which allows family and friends to send a gift of money towards your kids’ investment accounts in addition to your own contributions.
One thing that hit me like a ton of bricks into adulthood was realizing I couldn’t afford the lifestyle I was used to. My parents provided me with everything I needed growing up and a nice amount of wants, so when I got out on my own, with my own child in tow, I set out to maintain that same lifestyle. What I didn’t realize was how they provided for our family and that led me to living way above my means. I knew the keywords budget, savings, and invest, but I hadn’t quite grasped the how. What was missing from my upbringing in terms of finances was the transparency for how money worked within our family. Maybe because talking about money was taboo and frowned upon in the 90s and early 2000s? To avoid my kids making that same mistake, I am very transparent about finances and teach them with our actual budget. For example, our grocery shopping trips are great learning exercises for my son. We make the list together, check out the circular for coupons, and use a tally counter as we shop to stay within budget. In the last few months, he’s realized that our grocery expenses and budget have grown and I explained inflation to him. Another example we use is our family travel. We walk him through the process of how we choose where we will travel and how we set the budget for each trip. By including him in these conversations we hope that he will get a better sense of how we employ our dollars for our wants and needs so that he will be able to understand it for his own finances in the future.
These are just a few of many money lessons over time, but these have made the biggest impact on how I align my finances with parenting. As times change, money changes also – hello crypto! – and I’m sure as my kids get older, our money conversations will get deeper. Overall my goal with money when it comes to parenting is to raise financially responsible and independent adults and provide them with the tools and headstart to live their lives following their passions, not chasing a check.
Jasmine, the Founder and CEO of Money & Momming is based in New Jersey. Jasmine is wife, mom, and works full time as a supplier quality engineer in the aerospace industry.