When baby makes three, money management priorities should change

Published October 9th, 2016 - 06:41 GMT
Along with daily expenses, comes another big question: Planning for the future of the child. (Shutterstock)
Along with daily expenses, comes another big question: Planning for the future of the child. (Shutterstock)

Many people turn more financially conservative once they have children. For even some who never cared about their savings, investments and insurance, having a child can be a turning point.

That doesn’t mean parents manage money better than singles or childless couples; the number of divorces over money issues prove that. It simply indicates how some people appear to change their perception of money management when they have children. They may become more risk-averse and concerned about maintaining a steady income. These attributes could influence their decisions from investment to changing jobs or even making major purchases.

But that change can be still consistent with their personality, which means two parents don’t necessary alter their priorities instantly — or later — after getting their bundle of joy. The differing views on what having a child means in terms of where savings are channelled and how money is managed can create arguments, resentment and crises. With that in mind, it is important to discuss the following with your spouse.


Everyone expects child-related expenses such as food, diapers and day care. But along with these day to day expenses, comes another big question: Planning for the future of this child. Under this category, you will need to discuss schools and tuition, saving for college, lifestyle expenses such as trips, travel and sports, etc.

Having an open discussion with the other parent regarding these areas is critical, even though some of these areas may not surface until several years down the road. The point is to be clear about the costs that your individual perceptions may entail.

Compromise is a key word in those money discussions. When it comes to children, people often feel strongly about how they would like to raise them. So it is important to be conscious of the drivers behind a particular aspiration, and come up with a solution that is feasible financially.


Now that part of your income will be channelled toward child-related savings and expenses, how will you manage the rest? If you’re lucky to have a wealth that covers it all, you will need only some regular financial advice. But for many people, adding a new category of expenses and channelling savings differently mean cutting back on something else, and that is where problems emerge.

For example, if you were looking to upgrade a car, and also to buy life insurances for you and your spouse to protect your child’s future, what would you choose if you have to pick only one? Thinking of the long-term implications and landing for future events that don’t offer instant gratification can require a change of mindset. This is particularly difficult when you still have many unfulfilled lifestyle upgrades, which is often the case with young parents.

Realistic goals

When you’re planning for your children’s financial future, it is important to stick with goals that are feasible and realistic. If you’re running on a tight budget, you probably won’t be able to saving thousands of dirhams by the time they hit school age, and if you do, you may not put aside a huge college fund.

The first step you will need to take is to figure out how much income you will be able to channel into child-related investments and savings, after you account for the additional expenses that come with having a child.

With this knowledge, take a look at the various products your bank offers for long-term savings. Pick the ones that suit your individual situation and offer some flexibility. Although you may not intend to tap into these savings for any other purpose, you will want to make sure that in case of an emergency, this money can be accessed. Better planning is realistic planning, which also can lead to actual results.

By Rania Oteify

© Al Nisr Publishing LLC 2019. All rights reserved.

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