Let me dispel a misconception that may be causing you to lose sleep some nights… You are not bad with money. You are not irresponsible. You are not a bad parent because your credit rating is less than stellar and despite appearances to the contrary, you are far from alone. As living costs skyrocket the cost of raising a child is becoming increasingly untenable even for double income households with relatively well-paid jobs. In fact, at last count, the cost of raising a child to the age of 21 was close to a quarter of a million pounds. That’s a lot of anyone’s money. When you were growing up, your parents probably extolled the virtues of saving. While don’t get me wrong, saving is an important step in managing your household finances but given how heavily the financial deck is stacked against parents today, it’s rarely sufficient on its own in this day and age…
Because your wages are shrinking in value even if they’re staying the same
Even if your wages have remained the same or even grown since 2010, years of chronic government mismanagement have meant that the actual value of your wages isn’t rising along with inflation. In fact, we’re currently in the longest period of wage stagnation since UK records began. As rent, taxes and the cost of essentials rise exponentially, it’s little wonder that parents feel the pinch. As such, most parents find themselves turning to high-interest payday loans and leaning heavily on their credit cards. This means that a growing proportion of their monthly income is spent paying off debts.
Because most savings accounts are rubbish
If you’re pinning all of your family’s financial hopes on a high street savings account, you may need to manage your expectations. Most high street banks have pretty anaemic interest rates averaging a pitiful 0.06%. If you’re serious about saving, it’s time to look into some online alternatives. Since online lenders have much fewer overheads they’re able to pass the savings onto savvy savers. A fixed rate bond or ISA can yield up to 2% growth in your savings.
Because you aren’t investing
There’s a good reason why so many people choose to supplement their savings with a portfolio of investments. While investment always carries with it an element of risk, it doesn’t take much savvy to mitigate that risk by diversifying your portfolio so that you find the sweet spot between investing enough in profitable companies that you see a healthy monthly dividend and insulating yourself from risk if one of your investments decreases in value. If that sounds like a little too much hard work for your tastes there are apps like the acorns app that will do all the hard work for you. Augmenting your savings with investments is a sound strategy that gives potentially high yields while shielding you from big risks.
Because you don’t have a side hustle
A lot of families augment their income with a side hustle. This can be anything from running a small business in your evenings and weekends to selling your stuff on eBay or using money making apps to earn a little pocket money here and there. Every little thing that you do adds up and allows you the disposable income you need to keep saving while coping better with day to day expenses.
*This is a collaborative post. For further information please refer to my disclosure page.