From Ash Cash, personal finance expert, speaker and bestselling author.*
Wait… Wait… I know what you’re thinking. How can this guy be writing an article about something as precious as his family, but sound so insensitive in the title? What does he mean that starting a family ruined his finances? Surely there has to be a positive angle when talking about family finances.
Let Me Explain
First and foremost, starting a family is one of the best things that has ever happened to me in my life and anyone who has experienced being a parent will tell you how much joy parenting really is—up to a certain point. The truth of the matter is that children are blessings and can change your life for the better, but unfortunately they can also change your wallet in the opposite direction if you aren’t properly prepared.
Love Is in the Air
My wife and I met over 15 years ago and it was love at first sight. Well, maybe not exactly—I had to convince and woo her a little, but she eventually made the right choice and fell to my charm (or my unwavering persistence). We had a great time dating and rarely discussed starting a family because we were enjoying our lives, careers, and looked forward to more world traveling. After five years of dating, we decided to get married and wasted no time starting a family thereafter. My daughter was born approximately 11 months after our nuptials and this was one of the best days of our lives. We enjoyed our new family immensely, but soon after we were hit with the reality of parenting and raising a young child.
Love Didn’t Pay the Bills
Bills started to pile up immediately and we were left with many tough decisions to make as it related to our priorities. Were we going to pay our medical bills first or use our cash to buy clothing and diapers? Could we afford child care or should one of us stay home? Was it time to pick up a second job or was there another way to bring in more income? The fact that it is expensive to start a family set in pretty quickly.
Love Lowered Our Credit Scores
After months of robbing Peter to pay Paul, we were almost maxed out on our credit cards in an attempt to make ends meet. We watched our credit scores closely and noticed that these high credit card balances had taken a toll on our score, dropping it almost 30 points in a short amount of time. We learned that overuse of our credit cards had taken us way over the recommended maximum utilization ratio of 30 percent.
Love (and a Little Discipline) Fixed It All
Immediately, we started to budget our expenses and focus on our needs rather than our wants. We tightened our belts a little and by doing so we were able to pay down our debt and get our score back on track. We also started to pay ourselves first and created an emergency fund with a high-yield savings account in order to prevent ourselves from being dependent on credit. We focused on our needs and budgeted for the wants, and before we knew it, our ruined finances became a walk in the park of family finances.
The Lovely Conclusion
Starting a family is still our greatest accomplishment, but turning our family finances around is a close second. Never underestimate the power of planning, but also don’t beat yourself up if life throws you lemons—or babies for that matter. Now at child number two, my family finances are growing and what seemed as an out of control situation was put back in order with a little planning and discipline.
*The opinions/views expressed by Ash Cash are not considered opinions/views of of BMTX, Inc., a wholly owned subsidiary of BM Technologies, Inc. BMTX is not a financial advisor and individuals are urged to obtain and consult their own financial advisors.