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How to create a family spending plan

kid shopping with family

It’s easy to overspend on your child, whether it’s on something you want for them or something they’re craving. But when we make impulse purchases today, there are often trade-offs down the road. Could what you’re spending now, do lasting harm to your own financial future—or hinder your ability to do something more meaningful for your family tomorrow?

Plan your spending with the long term in mind

To avoid overspending, it’s always helpful to consider your most important long-term goals. Take retirement: 72% of parents say they have put their child’s interests over their own retirement needs. Yet, the cost of retirement can add up to more than four times the average expense of raising a child through high school1.

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Average spending


$233,610 - Average cost to raise a child through high school2

$985,580 – Average spending during 20 years of retirement (not accounting for inflation)3

Keep in mind that providing financial stability for your whole family is one of the most important things you can do for your children and yourself. Before spending more on “wants,” focus on securing your financial foundation:

  • Safeguard your family with an emergency fund that will be there when any of you need it. By helping you meet unexpected expenses or tide the family over if household income temporarily drops, this fund can be a crucial first line of financial defense. Experts recommend keeping three to nine months of expenses on hand, depending on your circumstances.
  • Pay down credit cards and other high-interest debt. You can free up cash for both short- and long-term needs of children and parents if you can avoid paying the higher interest rates credit cards typically charge. Attack those card balances first, before moving on to lower-interest auto, home and student loans.
  • Take full advantage of a retirement fund match, if your employer offers one. Also, making the maximum pre-tax contribution can help keep you on track for retirement, depending on your age and financial circumstances. Your financial independence in retirement may mean a lot to your kids later on.
  • Contribute as much as you can to your kids’ college accounts. By doing so now, you might minimize the financial pressures later, when you could be less able or willing to shoulder their tuition and living expenses.
  • Have enough life insurance to support your household’s needs. Nothing could be more important to your children’s future than to ensure that you’ll be able to replace the financial contributions of your family’s breadwinners.

Set a spending plan that motivates the entire family

Once you’ve established these financial building blocks for your family, you may want to start funding other savings priorities, like a family trip or a pool. Like any great plan, it’s going to work better if you have shared it and have buy-in from everyone involved. So bring your family together to discuss the household budget in detail, select key spending priorities and set short- and long-term savings goals. Document those goals and post them on the fridge or somewhere everyone can see them. It’s all about staying on track, and it will help set up more and more moments when the best answer for your family’s financial future is a confident “yes.”

  1. Age Wave and Merrill, The Financial Journey of Modern Parenting: Joy, Complexity and Sacrifice, 2018
  2. USDA, Expenditures on Children by Families, 2015
  3. BLS, A closer look at the spending patterns of older Americans

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