When you become a parent, you become fully responsible for the health and safety of another human being. You’re also responsible for the financial security of your family, which is why financial planning is so important. Despite this importance, many parents aren’t quite sure where to begin with this essential task. If you are one of these parents, know that financial planning doesn’t have to be complex or confusing. You just need to take a few basic steps, like the ones below, to ensure a stable future for your family and less financial stress for yourself.
Complete Some Basic Estate Planning
Let’s cover this step first, because it’s one that many parents, especially younger ones, tend to skip. Proper estate planning, however, is one of the most critical ways for parents to ensure that their little ones have the love, care, and financial stability they need in life no matter what happens in the coming years. So at the very least, make sure you have a will, which you can DIY or write with the help of an attorney, and also make sure you have enough life insurance (and, for extra peace of mind, business insurance) to protect your family in the event of a tragedy. Also, know that your rates can be impacted by lifestyle choices, such as tobacco use, so this may provide some added motivation for putting a stop to those dangerous daily habits. By kicking your unhealthy habits, not only can you potentially save some money on your life insurance policy, but you may also be able to add more years to spend with your family.
Word to the wise: Once you have all your documents squared away, consider purchasing a fireproof safe to keep them from harm’s way. By keeping all of your important documents and information in this safe, you’ll know they’ll be safe in the event of a fire!
Make Smarter Credit and Debt Choices
Balancing debts and savings can be a lot trickier than you think. That’s because some debts, like a mortgage, can actually help you build more financial equity, and also help build a better credit score with time. Of course, if you have mountains of credit card or loan debt, paying those off will likely only help your credit rating and improve your overall financial stability. Aside from managing debts, parents also need to make other smart choices when it comes to managing their credit ratings. A higher credit score will give you more access to loans for housing, school, and even unexpected family expenses. Plus, that higher credit score can save you the extra expense of deposits for certain bills and utilities. So, plan on taking some simple steps to clean up your credit and boost your score. If you’ve already paid down debts, you can accomplish this by disputing errors, making timely payments, and keeping balances fairly low.
Set Up Some Family Savings Accounts
As a parent, you have so many hopes and dreams for your little ones. That type of forward-thinking can also help you dream of future financial goals that will improve or preserve a better quality of life for your entire family. These goals may be different for each family, but creating a few different savings plans should definitely be at the top of the list for parents. Start by setting aside money on a regular basis for your family emergency fund. An initial investment of $500 is a solid start, but aim to save anywhere from three to six months of expenses. You can dip into this account for family emergencies, such as unexpected home repairs.
Next, start investing in your retirement. Focusing on retirement savings before college may seem like a financial mistake for many parents, but you need to remember that you can always take out private loans to pay for education expenses, especially if you maintain a good credit score. Taking out loans to fund retirement, however, is typically not a feasible financial option.
If you’re having trouble getting your finances on the right track, don’t hesitate to enlist the help of people who do it for a living. Fortunately, with the help of online job boards, you can hire an accountant who can assist you with your finances.
Covering these basic financial planning steps can take a lot of worry and stress off of your shoulders. So give yourself some peace of mind, and give your family some added security, by taking the time to plan for a stable financial future.
Photo Credit: Pixabay
Check out the authors website: