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6 Ways For Young Parents to Approach Money and Finances

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Every year, my partner and I sit down and talk about our financial goals. We always talk about money, of course, but not just the budget. We also check in with each other about the many ways our emotions inform the way we spend or don't spend money.

Part of me is still adjusting to the fact that life with children is much more expensive. A solo trip out for coffee costs about $5. Now, a trip to a local coffee shop with my family of four costs, like, $20(!). There's also a sense of urgency that looms over us constantly that we should do more to prepare for emergencies. And the new reality that includes worrying about things like college savings plans and life insurance.

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Talking about money isn't always the norm in certain households. Our relationships to money are all different. My mother was a frugal woman, but she always indulged us with clothes and shoes. So what are the things I'm most comfortable spending money on? That's right. Clothes and shoes. I used to have quite the shopping habit in my pre-baby life.

Being aware of our money baggage is important for all parents, whether you are managing finances with a partner or on your own. Here are some things we have tried to keep things in check:

1. Weekly money meetings

My partner and I talk about money at different times during the week. But every week, we allot time to look at our spending, review bills that need to be paid and plan ahead for future expenses.

For example, we know that next month my car will need a repair that will cost about $250, so we plan ahead for that. Since we both have steady pay and freelance income, we project how much money will come in for the month. Planning ahead also means that money is earmarked for certain things, and we are less likely to overspend.

After doing our check-in earlier this year, I decided I would eliminate my empty pay-off promises.

How do we make this happen? We set Google calendar appointments for these chats and then set reminders for action steps we might decide to take, like calling the planner.

2. Create money buckets

We are attending two destination weddings this year, so we calculated a budget of how much we need for each trip and how much money we would take out of every paycheck to meet our goal. The trick here is to not overspend, which would force us to pull money out other buckets.

3. Educate yourself about building wealth

Full disclosure: I didn't grow up in a household where we discussed mutual funds and investments. Wait, you mean you can make money by having money? I knew there was a stock market, I just didn't think it had anything to do with people like me. I was the first person in my family to go to college, and I didn't have a 529 college savings plan to rely on.

Now, my partner and I make enough money to think long and hard about the future. Last year, we set up a college savings plan for our son. I am reading about investments and finding other forms of passive income, because living paycheck to paycheck should not be our strategy.

You might already have investments or a 401(k) you need to enroll in or re-visit. Take the time to do it. These investments, done early enough, could mean huge dividends later.

4. Savings

Ugh. After all these buckets are made, we have to determine how much we need to build up good ol' savings. Personally, I'm always thinking about what would happen if the roof of our house caved in. At a minimum, your saving should include enough to pay your insurance deductibles. Even better is to have at least 10 percent of your income in savings. Still, others recommend up to 6 months of living expenses. Do you know anyone who has that much saved up? I don't. Is this an easy feat for any of us? Not really.

But we have to try and save as much as we can. Again, set attainable goals. And keep in mind, $500 in savings is better than no savings at all.

5. Credit card debt

I confess, sometimes I use my credit cards and then tell myself I will pay it off at the end of the month. Then, I quickly forget about it.

This year, we are going to add reviewing credit card statements to our weekly meetings. After doing our check-in earlier this year, I decided I would eliminate my empty pay-off promises. I accumulated debt in 2014 when I was laid off work after the birth of our son. We added to that debt last year. I'm happy to report that added debt was for experiences and professional development not luxury items. However, debt is debt. So we set a goal of paying off all that debt by the end of this year. In order to do so, we will use a majority of our supplemental income toward paying this off.

My partner and I are open about the fact that there's a part of us that wants to live carefree when it comes to money.

The area of growth for us, in terms of emotions and money, will be to not use credit cards for things.

6. Don't avoid it

My partner and I are open about the fact that there's a part of us that wants to live carefree when it comes to money. But we understand that budgeting now will mean, in the future, we'll have security.

Of course, we know that we need to have some fun every now and then—that it's important to enjoy the fruits of all our labor. But fun can still be within budget. It might mean a dinner splurge every now and then or a weekend away just the two of us. It's important not to make such a strict budget that you feel you are no longer enjoying life. At the same time, when we buy a bigger family car later this year to accommodate our annual family camping trip, it might not be a luxury vehicle.

We all place a different value on money, and it's important to recognize that. Discussing shared values, dreams and aspirations is indispensable if you are in a couple wanting to get control of spending and finances. Single parents, too, need to make an honest list of these things.

Being honest with ourselves and each other about why we drop $5 on a coffee every morning is an important step. It's the only way to figure out whether it's a habit that needs to be curbed or an indulgence that has to be accommodated.

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My partner and I realized, through our discussions, that our disposable income was spent on eating out with friends and concerts and, to us, that contributed to our happiness. For us, it remains a priority. For our budget, this meant fewer to no designer clothing or shoes. And that we bring lunch from home to the office.

It's all about balance and not ignoring the bank account. Best of all, we're becoming great role models of smart money habits to our kiddos, right from the beginning.

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