Theme: Budgeting for a young family
Bio: Tom Kaempfer is currently the Director of the Grants Management Unit at the New Hampshire Attorney Generals Office, where he manages all financial aspects of federal and state funding, in excess of $50 million. Tom was the 2018 Baron’s Financial Forecasting Winner. He earned his MBA with a focus in Leadership from Franklin Pierce University. Tom is an exceptional young professional and family man.
No matter how much people think they will be ready for all that parenting is going to throw at them, it seems like everyone has quite the learning experience after their first child. My brother and his wife went from craft beer, weekends away, and spontaneous adventures with friends to being much more conscious with their spending and changing their habits.
● What surprised you and your wife when you first had kids, and how did it impact your budget?
No matter how much you plan for the first child, you will certainly underestimate the costs associated with them. It’s not necessarily just the costs that you would think: clothes, diapers, strollers, etc. But it is all of the other cursory costs. For instance, the extra laundry, increased utility bills, and in some cases, needing to move to a larger dwelling. You can’t always control for those costs.
● How would you recommend approaching big budget items for a small family, like housing, groceries and other essentials?
Budget higher than you think. It is difficult to determine fluctuating budgets like groceries, so ensure that you give yourself enough room just in case.
● Much of what is not talked about when we look at budgeting is understanding your income stream and setting you and your family up for success. What advice do you have for a couple considering starting a family and/or a young family that has children?
Ask people you know with a family about their day-to-day spending habits. Think about what you are spending now and how that could be conceivable with children. You will likely have to make sacrifices to ensure that your new family has everything that they need. Make sure you are okay with either giving up, or scaling back, certain activities that may be expensive.
● How did your thinking about budgeting change as your family grew over time to multiple children at different ages?
Budgeting is always a learning experience. Even though I have six children and consider myself very financially savvy, there are things that I still learn about money and how to stretch money further. Buying kids brand new stuff is often not necessary. There are second hand shops, yard sales, hand me downs, and coupons that can really make a difference. Don’t be afraid to shop around, and don’t get into the trap of convenience over savings.
● What are some habits that you have formed that have helped you to remain in line or under budget?
When on a budget, you need to pay special attention to sales, clearances, and second hand items. I have learned to “stock up” when I see an item, or food, that I purchase often when it’s on sale or clearance. Second hand shops are wonderful, and many of the things you can buy at those places are nearly new. You can really save a lot.
● We hear a lot about how most American’s do not have an emergency fund of any kind. Can you talk about why this is important with a family?
Things are expensive. Some of the more expensive items that you possess could be extremely expensive to fix. If it is something that you rely on every day (think vehicle, heating system, water heater) you will need to repair it right away; not when you can save up for it. So, get ahead of it and be prepared. It’s a terrible feeling to know you need something fixed but don’t have the money to do so.
● Realistically, how much should you set aside for an emergency or how would you recommend figuring out the right number for your family?
Take a quick inventory of the “big ticket” items that you have. Which of those items are likely to need repair in the near future? For instance, if you have a new vehicle still under warranty, that likely wouldn’t need costly repairs soon. But, what if your heating system (boiler, wood stove, furnace etc) is 25 years old? That will probably start needing repairs, if it doesn’t already. Estimate what the costs of repair, especially a worst case scenario repair, and have enough money on hand in the event that you need to repair or replace it.