How to Make Parenting Affordable When you’re in DebtNov 07, 2018
Clothes, food, field trips, eyeglasses…there seems to be a never-ending list of expenses when you’re raising a family. Far too often, it’s easy to turn to debt to fund the gaps where your income doesn’t stretch. According to BDO Canada’s Inaugural Affordability Index survey, this fact rings true for parents all across Canada who carry a higher debt load than any other demographic. But it doesn’t need to be this way. You can make small changes that will help you whittle away at those debt balances while making life more affordable.
Gen Xers are struggling to keep up
Gen Xers, especially those with children, have many competing financial priorities. Between paying for everyday costs such as groceries, clothing and utilities, many are saddled with hefty mortgage and non-mortgage debts. On top of that, they’re supposed to be saving for their kids’ education and their own retirement. Here’s what Gen Xers report to be the most unaffordable:
- Personal debt – 8 in 10 Gen Xers carry some form of debt compared to 74 per cent of all Canadians. Homeowners are also likely to owe $25,000 compared to the national average of $20,000.
- Saving for retirement – 82 per cent of 35-54 year old’s view retirement as a necessity, but 1 in 3 have zero retirement savings and another 37 per cent have very little.
- Day-to-day expenses – Nearly 30 per cent of Gen Xer respondents say it’s hard to feed their families while 43 per cent said clothing and necessities were challenging to afford. In addition, three quarters said it’s especially tough to save for a major purchase.
Lack of affordability isn’t a stand-alone issue. A high debt load can also make everyday expenses seem out of reach and syphon all remaining money out of your budget. That’s why it’s important to realize that both these issues must be tackled together in order to relieve financial stress.
Paying off debt and improving cash flow?
Sometimes making improvements to your finances is as simple as changing your mindset to become more aware of your financial and spending habits.
Here are 3 things you can do now that will improve your affordability:
- Follow a budget – There are sometimes forgotten or unimportant expenses each month that are costing more than you think. Take the time to go over ALL your expenses to see where you could make some cuts. Use a budget spreadsheet or check out a budgeting app that will keep you accountable and show you the areas where you might be overspending.
- Find ways to save – Now is a good time to look into your interest rates, shop around for a better mortgage rate if you’re coming close to renewal and start adding as much as you can to your emergency fund. An emergency fund will keep you from turning to debt and give you a buffer when you need it. Fall is a great time to get your finances in order before the holidays.
- Deal with debt – If you’re just paying the minimum balance on your cards, you’re going to be paying for a long time. Instead, find a method you can stick to such as the Debt Snowball Method or follow a finance blogger to motivate you. If you’re feeling lost, talk to an LIT who can recommend debt relief options based on your specific needs. Dealing with debt sooner than later will give you more options, and you’ll have more money to put toward what matters each month.
Being more mindful about your money is something you can practice daily and get the whole family on board. Talk together about ways to reduce debt, reduce spending and find fun, free leisure activities.