Wealth creation while raising a family

Wealth creation when raising a family is possible and essential. While the current cost-of-living pressures are hitting even high-income family budgets hard, those with young families mustn’t give up. Young families can create a foundation for sustainable financial growth with professional guidance, education and a well-laid-out financial plan.

At First Financial, we encourage starting early wherever possible. Laying the groundwork now, even during these very busy years, can deliver long-term financial benefits for retirement and beyond.

A big hurdle facing young families is sacrificing lifestyle for future financial security. Wealth creation does not necessarily mean an austere set of financial measures. It does, however, require discipline, forecasting and a sound level of financial literacy.

A financial adviser will be your greatest asset in establishing and building a wealth accumulation strategy. They work with you at the start to set up an achievable financial plan and are with you on the journey to adjust, fine-tune and chart your progress. In a way, they’re your money mentors. In this article, we unpack plausible strategies to help get you started.

Establish a family budget. There are plenty of online budget tools. The key here is to be 100% transparent and honest with yourself. You need to know where your money is coming from. Employment, any side hustles, government assistance, investments, etc., and document all of them. Next, you need to do the same with where the money goes. Housing, food, transport, childcare, school fees, uniforms, extra-curricular activities, discretionary spending, utilities, and everything else on that list.

The next step is harder. Categorise your spending into two columns: needs versus wants. Look for reductions. Subscriptions and memberships you don’t use are a good place to start. You will be surprised how much room you can make in your budget for savings.

Automate your savings. Direct your savings amount into an automated high-interest savings account each payday. This disciplined approach builds the habit of paying yourself first. Let it accumulate for several months before checking the balance. Reward is a great motivator.

Establish an emergency fund: An emergency fund is one of the most savvy investments you can make for your family. Aim for 3 to 6 months of essential living expenses. An emergency fund is your peace of mind. It covers life’s curveballs: job loss, medical issue or an unforeseen event. The emergency fund insulates you from relying on high-interest credit if you experience a significant difficulty outside your control.

Minimise and effectively manage debt: Debt is normal; however, minimising and eliminating bad debt is critical. Credit cards and personal loans carry high interest rates, so paying them down is a priority. The quicker you can, the better. Making extra and larger payments will help reduce the accumulating interest. Consider consolidating your debt into a refinancing structure to reduce interest. High interest is a savings crusher.

Utilise government benefits or support: Check your eligibility for Family Tax Benefits A & B, and any child care subsidy, energy rebates, rent assistance, and first home buyers schemes that might benefit your circumstances.

Insurance: To ensure adequate cover, review and update your insurance, particularly home and contents. Also, review your income protection, life and health insurance policies and vehicle(s). Shop around for better deals.

Be strategic with your superannuation: Ensure you maximise employer and spouse contributions and any government co-contributions to superannuation if you’re eligible. Consider salary sacrifice as part of a tax-effective long-term growth plan.

Set an achievable saving goal. For example, $25,000 over the next three years. That is saving around $161pw. Reevaluate every three months and adjust for any life changes. A pay rise, or an expense, and plot a new path to your goal. As your children age, it is worth teaching financial literacy at home. Having a healthy respect for money and understanding the value of savings will encourage better money habits.

At First Financial, we encourage clients to seek professional financial planning help and utilise our suite of services to ensure a sustainable and rewarding retirement. We help people at all life stages, and for those starting on their family and wealth accumulation journey, we are your money partner.

The sooner you start, the better off you’ll be.

First Financial offers clients more than a suite of financial services. We offer professional financial advice tailored to your needs and long-term goals. If you’re considering starting a financial plan for you and your family’s future, speak to our expert team now. Today’s decisions can set up a successful tomorrow.

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