Household finances can impact kids
WHILE it’s said money can’t buy happiness, new research has shown poor money management could hamper your kids’ start in life.
According to the latest AMP NATSEM report Little Australians, the financial health of the household a child is growing up in could have an impact on their learning and social-emotional development.
The report found that 20% of 4 and 5-year-olds live in families which reported at least one type of financial hardship, such as not being able to pay the rent or heat the home and going without meals.
Children in families facing multiple financial hardships recorded the lowest average overall development levels.
Further, children living in families who would find it difficult to raise money in an emergency had lower overall development scores on average than those from families who would have no trouble raising emergency funds.
So how can people create financial security for their families and set their kids up for the best chance in life?
With a little planning there are a few simple strategies all families can follow to improve their financial wellbeing.
Financial health checklist for families: Do you have a budget? It is essential for all families to have a household budget and stick to it.
If you spend more than you earn, it can quickly land you on the rollercoaster of debt. Learn to differentiate between needs and wants, as trying to keep up with the Joneses can put unnecessary financial pressure on families. Look for ways to reduce spending such as using discount petrol dockets, buying generic brand groceries, taking your own lunch to work and cutting back on takeaway dinners.
Use one of the many online budget trackers provided by financial institutions. Some allow you to easily download all your transactions in one easy step so you can track actual spending against your budget.
Strategy for paying off debts: One of the biggest threats to family budgets is credit card debt. Credit cards are fine if they are paid off in full each month before interest is incurred. But if there is a large amount of debt sitting on a card, it could be costing you big time.
It’s important to pay off this kind of debt as fast as possible. To do this, you will need to make more than the minimum repayments each month. If you have several cards maxed-out, consider rolling all the debt into one low interest-bearing card to save on interest. Once you’ve paid off the credit cards, tackle personal loans and the mortgage next.
Savings plan for education: When it comes to education costs, it pays to plan ahead.
If you have young children, start saving for their education in the early years.
People with children in school can try to set money aside, so uniforms, books and fees are not such a strain at the beginning of the year. There are myriad ways to save, including high interest-bearing savings accounts, mortgage offset accounts and managed funds.