No two days are the same. So it follows that no two weeks, months, years or even people are the same. Life changes every day and some days it changes a whole lot more than others. When my son was born, for example, oh wow did my life change. And that’s really where this story begins.
A few short years ago my wife and I were both in fairly comfortable jobs. We got by from month to month and were saving for our wedding. Life was pretty comfortable. When we found out we were pregnant we were ecstatic (and surprised). Once the excitement settled down and we started to go to the doctor for checkups and the like it quickly became apparent just how much kids cost and there is no working out how much they need and how quickly they need it. And here’s the kicker, they NEVER STOP NEEDING MONEY!
A few months in and we were weighing up the costs of doctors and hospital visits, all the accessories that such a tiny little person needs such as car seats, cots, diapers, furniture, and clothes… Oh so many clothes. And these were just the immediate needs. Shortly after our brand new son was home with us we were thinking about education. Some cities, such as Sydney, are so crazy that to be able to get a spot in preschool you have to put your child’s name on the list practically as soon as they’re born, even though they won’t be going for a couple of years. Child care, preschool, grade school, college, university… Oh my they’re expensive! Oh yeah, and by this time we’re down to one income of course.
How on earth were we going to be able to afford to send our son to the places we wanted to send him? Not only that, but we also wanted to start a kind of nest-egg for him. We had personally experienced how difficult it is to get ahead in life without some kind of financial backing.
The solution to this problem, these imminent expenses, was to start a savings system. But, we had to not even know about it. The savings that would start to grow for education and the like needed to grow without any ongoing involvement from my wife and I. Why? If we knew too much about it we might be tempted to be a little less careful with our own money and reach into that savings fund as an easy backup. Or, some months we might just decide not to save for that month, and I’m sure that would have happened a lot.
The solution for us was to set up a high interest savings account and an automatic transfer into that account a few days after the start of the month. My paycheck was due to arrive at the end of each month, so setting up the transfer for the start of the month meant that there was a few days worth of buffer there just in case my pay took a couple of extra days to clear.
Every month a few hundred dollars would automatically find its way to this hidden account and that was that. Because this money was transferred only a few days after being paid, we didn’t miss it. It meant that we dealt with what was left. Try to set up this transfer for half-way through the month, and there will never be enough left to pay the bills. We rarely even bothered looking at the account apart from when we received the occasional quarterly statements. Honestly, when we read these statements we were blown away at just how much the account had grown in such a short amount of time.
A few years later we had a daughter and setup a second savings account for her. We also setup another account to save for a house deposit (those things are expensive). We knew we’d eventually want to by a house, it was a matter of having enough deposit and finding the right place.
Eventually we decided we’d had enough of renting and it was time to buy a house. Houses, like kids, are expensive, really expensive. In order to have enough money for the deposit we had to raid both of the kids accounts as well as our own savings. Oops. In any case, we made the deposit, and we now own about 6% of our home.. Yay!
But… We still have accounts for each of the kids and our house deposit account is now our holiday/home improvement account, and each month we still automatically transfer a few hundred dollars to each of them. The kids accounts are on the rise again and we’re starting to think about what renovations we want done. Progress
Things to Remember
Automation is good! If you looking for a way to save money, then setup a separate account and setup and automatic transfer to this account straight after you get paid! Because this money is no longer in your “everyday” account you’re not tempted to spend any of it and you and up living a lot less.
Have you got a story about how you saved money or how you dealt with the expenses that come with a baby? Please share below!