5 money lessons that didn't resonate with me until I had kids


Holly Johnson

Holly Johnson

Blog author Holly Johnson

Published December 25, 2017|4 min read

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Having kids is one of the best things I have ever done, but it has also been one of the scariest. Of course, parenthood is also ripe with lessons. Being responsible for these little humans led me to think through decisions more — and that carried into our finances. These are the five main lessons having kids taught me.

1. The financial decisions you make now absolutely matter

Before you become a parent, it’s easier to make decisions that benefit you in the moment, regardless of their long-term costs. You can buy that overpriced furniture or fund frequent getaways because, well, why not?

But once you have kids, you’re forced to think of someone other than yourselves. My husband and I changed a lot of our financial practices right after we had our first child. Instead of making decisions based on “wants,” we started to think in terms of “need.” As a result, we quit wasting our money on more frivolous items and started saving for the future instead.

Starting from scratch? This easy budget template is the perfect tool to get you going.

2. Debt is a drag

Another money lesson we learned from parenthood is that nearly any type of debt is a drag. Once we became parents, even our car loans started to seem like a huge hassle because we had kids to care for and daycare bills to pay.

We decided to put more effort into paying off our student loans and car loans just to get debt out of our lives. Sure, paying off debt isn't going to happen overnight, but it becomes a bigger priority to pay more than just the minimum payment each month once you have kids to take care of.

Need a starting point? Consider these six steps to pay off your debt.

3. Saving for retirement is important & not just for you

Retirement always seemed like some far off issue to deal with later. But once our kids came along, we learned to see retirement planning for what it really is – planning for the inevitable. We realized that if we didn’t take retirement plans seriously now, we could place a burden on our children in the future.

So, we started maxing out our retirement accounts and investing more. We also started investing in real estate to hedge our bets and provide another stream of income. We knew to reach our goals and not burden our kids, we needed to take our future seriously.

And be sure you're informed — check out these seven retirement myths that can hurt your finances.

4. You have to plan for the worst-case scenario

But, what happens if we don’t make it to retirement? No one wants to think about that, but having kids made us realize the importance of planning for that scenario. If we passed away young due to a sudden illness or accident, we wanted to make sure our kids were taken care of. For that reason, we purchased term life insurance three separate times – each time boosting the level of coverage we have to fit our current needs.

Having kids also made us reevaluate other insurance products. Did we have enough auto insurance? Did we have the right homeowners insurance policy? Not only have we tweaked all our policies a few times, but my husband and I also bought an umbrella policy to cover any other “what ifs” that could harm our family financially.

The first step here is getting an idea of how much coverage you need. Check out this free life insurance calculator to get started.

5. Dreams cost money

Last but not least, parenthood taught us that some dreams require planning and sacrifice. I always assumed my kids would go to college one day, but I realized I needed to save for them if I wanted them to avoid the crushing realities of student loan debt.

And that’s one example. We want to be able to help them pay for their weddings and to afford traveling to see them if they end up moving far away. We want to help them achieve their dreams, whether that means going to graduate school or starting their own business.

Most of all, we want the options you can only have if you save enough to leave the future wide open. Before kids, our dreams were just that: Dreams. Once we had kids, our dreams for the future became the reality we knew we needed to plan for.

Image: Petar Chernaev