Raising a child is expensive. Children need many things to grow and develop well, including a safe home environment, medical care, good nutrition, and education. With that said, it is no shocker that raising a child can strain family finances. According to LIPI, at the beginning of the pandemic, 64.8% of working households were experiencing financial difficulties. It can be even more challenging for working parents at a time like this when the annual inflation rate reached 4.35% in June, the highest in the past five years since 2017, as reported by BPS.
Expenses for children can be worrying if left unplanned, and not many parents take steps to remain financially prepared. More than 150,000 employees, including working parents, use our app every month to provide for their children. Our data shows that family & kids are in the top five reasons they withdraw a portion of their earned salary before payday. We are committed to our mission and will continue to do all we can to help people improve their financial wellness.
- Tobias Fischer, CEO of wagely
Every working parent needs to have a solid financial wellness plan regardless of how much they earn in a month. In the spirit of the upcoming National Children’s Day, let us look at some practical financial tips to help working parents become financially resilient while raising their children
1. Have a spending plan
Planning for expenses you must spend on will keep you from paying too much last-minute. For example, at the beginning of each school year, like this month, set aside funds for your children’s education expenses that will come up during the year. Your child will inevitably need additional school supplies, uniforms, books, and other needs. Set aside money ahead of time so you won’t be unprepared for these costs.
2. Avoid getting into debt
Getting into debt can be incredibly stressful, especially during the current COVID-19 pandemic. An easy and fast process from many illegal pinjol platforms has lured many people to borrow money. Not to mention the presence of pay later features on many shopping platforms. If you're not careful, you could end up with a mountain of debt that takes years to pay off. As tempting as it may be to use that kind of service, keep in mind that there's a greater sense of peace, freedom, and opportunity that comes with being debt-free.
3. Maximize employee benefits from your employer
One of the advantages of working for a company is the employee benefits package you’ll usually get. Typical benefits for working parents include flexible hours and remote work, paid parental leave, health insurance that covers the whole family, and many more. Many employers offer their employees innovative benefits beyond just health insurance and those perks. If you need more financial flexibility to help you afford children-related necessities, check to see if your employer offers Earned Wage Access (EWA). EWA by wagely lets you access your earned salary whenever you need it. That means you won’t have to turn to online loan providers or borrow money from relatives to pay for those expenses.
4. Build an emergency fund
Unemployment is stressful, especially when your family is growing. Although BPS recorded that the number of Indonesian workers affected by the pandemic has decreased compared to last year, there was still 11.53 million working-age population affected as of February 2022. That’s why it is helpful to have an emergency fund covering 6-12 months of living expenses in case of a layoff or change in employment. An emergency fund helps you survive while searching for a new job, especially if your family relies on a single income.
5. Save for your retirement
When you fly on an airplane, the flight attendant instructs you to put your oxygen mask on first before helping your children. The same applies to your financial wellness. With so many things to remember about your child, it is easy to forget about yourself. Prioritizing your retirement now will prepare you for the future and reduce the possibility of giving birth to the sandwich generation, where your child will need to support their parents and children. Like they tell you on a plane, you can’t help anyone else with their oxygen mask if you run out of oxygen yourself.
Those are the five tips you can follow to improve your financial wellness while raising your loved ones. From the time they are born until they graduate high school, managing the costs of raising children can be challenging for any family. But with some planning, discipline, and creativity, you can save money on many of the most expensive aspects of child-rearing. Happy National Children’s Day!