Building a house can be a major undertaking for a family with small kids. Not only can it take a big bite out of your daily cashflow, but it may also leave less room for other objectives, like saving for the kids’ post-secondary school education and, eventually, retirement.

That was the situation for one family working with Natasha Kovacs, Senior Financial Planner, TD Wealth. “It was keeping them up at night,” she says.

TD clients Nick and Justina discuss how they balance their family commitments with their business venture.

Raising a young family is typically one of the most rewarding phases of adulthood. But it can also be a financially strenuous period as parents juggle diverse and competing expenses, including mortgage payments, groceries, extra-curricular activities for the kids and unexpected emergencies like a leaky roof. On top of that, families may have medium-term goals, such as trying to put money toward a vacation once a year or buying a cottage. Lastly, they may also be hoping to save some money so they can retire comfortably.

You can call all those competing demands the “crunch zone.”

And with inflation hovering around 6% and interest rates significantly higher, there’s an extra layer of pressure these last few years. Add in endless money advice in the media at every turn and things can get complicated.

But Kovacs says there is a way to find stability amid the crunch.

“A financial plan helps customize how and when you will likely achieve a goal. It is specific and tailored to you,” Kovacs says.

Setting clear long-term goals is the first step. Like others, your foremost long-term goal might be to retire comfortably, or it may be something else entirely. Everyone’s different when it comes to what they want to do with their money in the future.

Once you define your goals, the next step is to make a plan to help ensure you can achieve them. After all, your government pension alone may not be enough to help fund the lifestyle you want in retirement. Having a financial plan in place will also help you figure out what you need to prioritize amid the chaos of your busy life.

Managing the pressures of the crunch zone, developing a financial plan and staying on track with your retirement goals can be Herculean tasks for a busy family to take on alone. Kovacs was able to speak to her clients about their building project and helped them question whether they needed all the expensive upgrades they were planning. Eventually, while the home was still under construction, money was redirected into their longer-term financial goals.

Here are some more things to consider as you set your own goals, map out a financial plan and navigate the crunch zone:

Be cash-flow conscious and create a budget

“My top tip for managing cash flow is to have a budget and review it,” Kovacs says. Being aware of your cash flow (your income minus expenses over a set period of time) can help you understand what direction your overall finances are headed in.

The cornerstone of an effective budget is your net income. She says you should record all the money coming in and all the money going out. You should also include the details of not only what you spend your money on, but also where you want to direct your money for future goals. From there, you’ll want to consistently track your spending and adjust if needed to stay on budget.

A budget can also help you determine how much money is going toward essentials — non-discretionary spending — and how much you can allocate toward discretionary spending.

For example, a private tutor for a child who is struggling in math class might end up falling into the essentials list. The fees for kids’ athletics, for example, may also become part of that list because the family believes extra-curriculars are important.

But what if you’re struggling to pay the fees for hockey? If hockey lessons are considered an essential extra-curricular activity, you may have to make a concession elsewhere. Bigger changes could include taking a vacation every other year, rather than once a year, or delaying a backyard makeover.

This is the kind of crunch many families face. A budget can help you determine where to pull back on spending.

Keep an eye on debt

Debts can weigh down your budget. But having a budget can help you figure out whether there are ways to manage debt better.

For example, you could divide your debts into “good” debt, such as an investment that will likely benefit you in the long run like a mortgage, and “bad” debt which is typically unpaid credit card bills or other accounts with high rates of interest.

Once you understand where debt fits into your budget, a financial planner can provide guidance on how to help eliminate it as quickly as possible. Depending on the situation, they can help you compare different solutions, such as using a line of credit which may have a lower interest rate.

To avoid racking up unnecessary debt, Kovacs says Canadians should consider being more intentional with their spending, prioritizing needs over wants and paying off credit card balances in full.

Sometimes stepping back and accepting that something is not currently in your budget is healthier than trying to put it on a credit card, she adds.

Prioritize your future self

Adequately saving and investing should be top of mind as you develop your financial plan because doing so can allow you to reach your long-term goals while also dealing with the short-term money demands of the crunch zone.

“Putting money into investment vehicles, such as a Registered Retirement Savings Plan (RRSP) or Tax-Free Savings Account (TFSA), takes the money out of your hands for spending and allows you to assign purpose to it,” Kovacs says. “These investment vehicles can help you to reach your goals because they have the ability to help increase your tax savings and efficiencies.”

Seek the guidance of a planner or advisor

Kovacs says working with a financial planner or advisor can help individualize solutions to people’s specific financial needs and goals. Needless to say, trying to manage your finances during your crunch zone can be more successful if you have a specialist to help guide you through the complexities.

She cites a recent conversation she had with another set of clients with small kids. The family was putting a significant amount of money each week into a savings account, yet they didn’t have a pension plan with their employer and didn’t have their TFSA maxed out. They had no particular goals for the money and simply liked seeing it in a savings account in case they wanted to spend it.

Kovacs thought the best place to put that money would be into an RRSP. As she explained to her clients, an RRSP can help defer tax and build up a retirement fund. It was a small piece of guidance, but her expertise was able to help her clients understand what would work best for their personal situation and longer-term goals.

The crunch zone can be a stressful time. With all the chaos of paying bills and raising a family, it’s hard to even think of goals and plans for thirty years down the line, let alone save for them. But Kovacs says, if you can establish your long-term goals and set up a plan to get there, financial balance can be found. And if you need help organizing your plan, reach out to a financial planner or advisor.

“You have to realize that every decision you make is going to ultimately have an impact on your future,” Kovacs says.