Hello Parents! We feel you. It’s been a rollercoaster over the last few years. You’ve slowed down with your career, had kids and one of you has been the primary stay at home parent. We get it, it’s not always easy for couples who have children to adjust from two fulltime incomes to one.
Now, after several years, the time has arrived. Your children have started school and now the stay at home parent is ready to re-enter the workforce. This presents an opportunity to significantly boost your household income. You have grown so used to relying on one income, jumping back to two can be an adjustment in itself. The question is – what to do with this newfound cash?
With a little bit of foresight, you can turn this extra income into some serious financial benefits for you and your family. Yep, you guessed it, we have got you sorted;
Sit down with your partner and work out what are your short, mid and long-term financial goals. While on one income you may have been putting a lot of financial plans on hold as you tried to make do. Now is the time to pay off any lingering debt, fix the car or water heater and clear the way for mid and long-term financial goals, such as family holidays, mortgage deposits/payments, renovations, private school fees and even retirement. A clear vision of where you want to be, makes the path there that much easier.
Keep your good habits
After being reduced to one income for so long, it might be tempting to suddenly go off and get a new car loan, finance some furniture and appliances or develop more expensive tastes in food and clothing. It’s much easier to sink into a lifestyle of debt and bad spending habits than it is to get out of them. Resist! You lived frugally for years and while you may have wished for nicer things you made it through okay. We are not saying you can’t have nice things but save for them and keep your good spending habits alive.
Set expectations at home
While one of you has been the income provider, the other has been doing all the housework. This dynamic is set to change, and it helps if you and your partner are on the same page. Are you viably going to keep up with all the housework now that both of you are working fulltime? Who is picking the kids up from school and who’s money is going in the savings and spending accounts? This is a drastic shift in finances and in household dynamics. Make sure you are both prepared and know what to expect from one another.
Prepare for extra expenses
With your kids reaching school age, you’ve now saved money on nappies, day-care and regained some semblance of sanity. Hurray! Alas, there are more costs coming. As your child moves through primary school into high school, there is going to be a host of more expenses that you will have to consider. School clothes, books, non-school clothes, toys, computers, Play Stations and increasingly expensive demands for birthday and Christmas presents. The list goes on. Make some decisions on whether to send your kids to private or public schooling for the duration of their education and plan your finances accordingly.
A sure-fire way to keep you from spending that extra income is to invest it! How you invest it is always an individual preference but owning a family home has always been the dream of many couples. Save for that deposit or start smashing out extra mortgage repayments. It might not sound too exciting, but seeing those numbers disappear off your mortgage is extremely satisfying. If you’re looking for investments with a bit more liquidity, there are plenty of options out there and loads of technology to make it easier. Just don’t trust everything you read on the internet!
At Visia, we would recommend speaking to a professional about the types of investment opportunities out there and the risks that come with them. Start the conversation today and let us guide you through this interesting life stage!
Kora Drage is an Authorised Representative of Financial Wisdom Limited ABN 70 006 646 108, AFSL 231138. The information contained in this article may contain general advice. It does not take into account your financial circumstances and objectives. You should consider talking to a financial adviser and read the relevant Product Disclosure Statement (PDS) before making a financial decision. Any views and opinions provided in this article may not reflect the views and opinions of Financial Wisdom Limited