The 1 Piece of Financial Advice Growing Families Need to Heed
There are plenty of tips for how to save, but far fewer for how not to spend. That’s where a family values plan comes into play that will make it easier to say “no” when the pressure builds to keep up with the Joneses.
![A mom and dad hold a smiling baby.](https://cdn.mos.cms.futurecdn.net/wsYpQVgN4agHhULtPrKQJN-415-80.jpg)
Some of the best financial advice I ever received was delivered at a funeral.
The son of a client who’d passed away stood up and told a moving story about a childhood summer vacation. His parents couldn’t afford the trips to Disney World that many of his friends had planned. So instead they put the kids in the car and drove for a few hours until they ended up in nearby Toledo, Ohio, and stumbled across a modest hotel with a pool, where they spent the weekend playing.
Decades later, that time with his family remained one of the son’s most vivid and treasured memories. What could have been a $5,000 trip became a $500 trip and was no less memorable or special because of it.
![https://cdn.mos.cms.futurecdn.net/hwgJ7osrMtUWhk5koeVme7-200-80.png](https://cdn.mos.cms.futurecdn.net/hwgJ7osrMtUWhk5koeVme7-320-80.png)
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Golden Financial Advice for Families That Often Gets Overlooked
Financial tips for growing families are everywhere online and follow a pretty standard list: Max out your 401(k); make sure you have life insurance and an up-to-date living will; contribute to a 529 college savings plan, etc. That’s for good reason: Those are all critical financial planning strategies that protect your family and your financial future.
But one equally important piece of advice that you don’t hear so often is the need for families to align their financial values and to regularly communicate to stay on track.
Family conversations about financial goals and values often go unspoken until they are forced by a major life event. It’s much better for it to be a continuous discussion that helps the family stay focused on what's important to them over the long term.
Quit Trying to Be So Perfect
In today’s society, the pressure to keep your lifestyle and spending in line with your peers is enormous. And if you think it’s bad now, just wait until you have kids. When children come along, we all develop a powerful drive to give them the best. But what is “the best,” and can it really be bought?
As a parent, life is going to present you with a thousand opportunities to spend money on something you think your kid needs. Using your family’s values and long-term financial goals as a guide, you’ll be better equipped to sometimes say no or settle for less than “the best.”
The pressure to keep up is constantly being reinforced in the media and by other parents. It’s easy to feel like you’re a bad parent if you don’t have your kid in the best ZIP code, the best summer camps, travel sports programs or in Mexico every spring break like their friends.
This competitive pressure only seems to be getting worse. Putting aside the psychological stress this can cause for kids, it’s also taking a financial toll. A recent survey found that 62% of U.S. parents who pay for extracurricular activities for their kids have gone into debt for all those soccer, dance, and piano lessons. One family in Colorado admitted to dropping an eye-watering $60,000-$100,000 a year on their daughter’s ice-skating passion, even though she wants to go to medical school.
Keep Everything in Perspective
I’m not saying it’s never OK to spend on these types of activities or to give children other costly experiences like travel. The important thing is to ensure you’re making these decisions for the right reasons rather than out of fear, and that you’re doing so without jeopardizing long-term financial goals like retirement and college savings.
As much as we want to give our kids wonderful memories and opportunities, the reality is that we don’t all have the same income or wealth to do so. Each family is going to have their own values and goals and widely varying financial means to meet them, so you should follow your own path rather than trying to emulate others.
The Toledo anecdote teaches us that children can have experiences in their neighborhood or local state park that are every bit as rich as vacations to exotic destinations. And they may well end up treasuring them more than those times when you splashed out for Disney World or the Caribbean.
Get Kiplinger Today newsletter — free
Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more. Delivered daily. Enter your email in the box and click Sign Me Up.
Jaime Eckels, CFP, has been helping clients achieve their financial goals for 20 years and specializes in developing savings behaviors, implementing debt-reduction strategies, analyzing client cash flows, defining investment policy, determining portfolio allocations, minimizing income taxes and maximizing client balance sheets.
-
Visa Is the Worst Dow Stock Wednesday. Here's Why
Visa stock is down sharply Wednesday after the credit card company came up short of revenue expectations for its fiscal Q3.
By Joey Solitro Published
-
Another Analyst Moves to the Sidelines on Tesla Stock After Earnings
Tesla stock is spiraling Wednesday after the EV maker's big earnings miss and Wall Street has been quick to weigh in. Here's what you need to know.
By Joey Solitro Published
-
Confused by Annuities? Making Sense of the Different Types
Many investors aren't sure if annuities are a good option for meeting financial goals. Let's look at the different categories, along with their pros and cons.
By Kris Maksimovich, AIF®, CRPC®, CPFA®, CRC® Published
-
Talkin' 'Bout My Generational Wealth: Baby Boomers
With retirement, each generation has different priorities and challenges. For Baby Boomers, it's a matter of ready or not, here it comes.
By Alvina Lo Published
-
How to Avoid a Big Hassle if Your Financed Car Gets Wrecked
How an insurance check is made out for repairs can cause a world of problems if the lienholder is left out.
By H. Dennis Beaver, Esq. Published
-
Estate Planning Strategies to Consider as Election Nears
Are big changes in tax laws coming soon? Not likely, but you might want to take advantage of higher estate and gift tax exemptions well before the end of 2025.
By David Handler, J.D. Published
-
How to Get Your Money's Worth From Your Financial Adviser
A good financial adviser will focus on how your financial planning and investment strategy align with your lifestyle and aspirations.
By Pam Krueger Published
-
Think of Prenups and Postnups as Financial Planning Tools
These contracts provide a clear framework for asset management and protection and are especially useful if you get married later in life.
By Andrew Hatherley, CDFA®, CRPC® Published
-
Congratulations on Your Raise: Three Things to Do With It
We're not saying you shouldn't spend it on a new car, but there are some considerations to guard against lifestyle creep and to help ensure a comfy retirement.
By Andrew Rosen, CFP®, CEP Published
-
Check Off These Four Financial Tasks to Finish 2024 Strong
The new year is a popular time to set financial goals, but now is the ideal time to check how you're doing. Four tweaks could make a big difference.
By Daniel Razvi, Esquire Published