Having a child is one of the most exciting and rewarding parts of life. However, it’s also stressful and expensive. There are so many costs that go into starting a family; from diapers to college tuition, your children will dip into your pocketbook more times than you’ll ever be able to count.
That’s why it’s so important that parents take control of their finances. There’s no better time than now to start managing your money in order to secure your family’s future. Here are a few financial moves all new parents should start on as soon as possible.
Will, Life Insurance, and Other End-of-Life Plans
When you have a child, you absolutely must also have end-of-life plans; otherwise, your family will not be protected when you die. Everyone wants to assume they’ll have a long life and plenty of time to plan, but the truth is that you simply never know. Wills allow you to ensure your loved one’s financial situation, as well as assign guardianship in the event of the worst.
Moreover, life insurance policies are always more generous and inexpensive the younger and healthier you are when you take them out. These will cover lost income, funeral and medical costs, as well as some debts after you’ve passed. When you live that nice, long life, you’ll be glad you took out insurance while you are at your peak physical state.
Prepare for Retirement
Too many people don’t properly plan for their golden years. Today’s young adults are particularly unprepared, with few on track to reach their retirement goals. When you have kids, a lackluster retirement plan doesn’t only affect you. With too little money set aside for the future, you run the risk of becoming a financial burden on your children.
So, closely evaluate your retirement needs and set up accounts to ensure you can reach them. One great tool to use is any retirement account set up through your company, particularly if there’s any match. Invest the full amount to reach the maximum match your company will offer; otherwise, you’re leaving money on the table.
We all want the best for our children, and ensuring they’re able to afford education after high school is one way to provide that. Look into the 529 plan options available to you. These savings accounts can go toward college, trade schools, and other educational expenses such as dorm fees and books. Even if they don’t cover the full costs of your kids’ education, they’ll go a long way toward lessening the financial burdens of pursuing their dreams.
Once you have savings goals set, it’s time to figure out your monthly budget. There are several tools you can use to track your spending, from using a phone app to jotting information down with a pencil and paper. You can even go with envelope budgeting if that works best for you.
Explore the different options and try things until you find what works. There is no one-size-fits-all solution when it comes to money management. The important thing is finding a system that encourages you to save and spend mindfully so that you’re in control of your money.
Financial Parenting Techniques
Taking control of your money isn’t just good for you; it’s also good for your children. Very few schools include financial literacy as part of the required education. As a result, many students enter the adult world with little understanding of how to manage their money. By including your children in the process, you give them a head start on learning how to be functioning adults.
Keep kids involved in age-appropriate ways. For example, you can give them an allowance and help them come up with and use a budget for that money. Encourage them to set savings goals and track their spending to reach them. This will allow them to practice their own money management skills in a safe environment.
Managing Your Business
If you own a business, you’ll still have plenty to take care of after you bring home your new baby. Some of the things you’ll need to do during this time include taking time every day to manage and look over your business’s finances, as well as make sure you’re up to date on your tax payments. If you fall behind on taxes, you could find yourself facing a slew of penalties, including late fees and interest charges. It’s easy to get wrapped up in the world of parenthood, but don’t forget that your business still needs your attention as well!
Taking these steps will make money less stressful and more useful for your family. There are so many joyful experiences in your path as you become parents. With the right planning, there’s no reason money needs to get in the way of fully experiencing that joy.