Financial Planning for Parents: How to Get Started

Financial Planning for Parents

Financial Planning for Parents

Planning for your financial future can be one of the most stressful things you’ll do in your adult life, simply because there are few guarantees. You never know what life will throw at you or when, and if you are a parent—or are planning on having kids—it’s essential that you start making preparations for at least the next five or ten years. Having kids is costly—over $245,000 over the course of a lifetime, according to one study—and so is owning a home and vehicles. It’s also important to start thinking about retirement, even if you’re only in your 20s or 30s, since your cost of living will likely go up in the future.

Fortunately, there are several simple things you can do now to plan for your family’s future. From setting up a college fund to learning easy ways to save money, preparing for your financial needs now will save you a lot of time and grief down the road and will ensure that your children are taken care of.

Keep reading for some great tips on how to get started with financial planning.

 

Calculate your assets

One of the first important steps in figuring out what your financial needs will be is calculating your current assets. Your home, vehicles, savings accounts, and any major investments will need to be counted. Talk to a financial advisor and find out how much your home is worth first, since it’s likely to be your largest investment.

 

Create a budget

Creating a budget will help you start saving money quickly, so sit down with your spouse or partner and go over your weekly and monthly spending. Look at your income and think about which bills could be eliminated or reduced, such as swapping cable for a streaming service. This is also a good time to think about whether your family would be comfortable on just one income if you’re planning to have a baby and one parent wants to stay home. Don’t slash too much from your expenses when creating a budget because you’ll want your budget to be realistic so it’ll be easier to stick to.

 

Build up your savings

It’s important to have some savings, whether you want to have a nest egg or just a household maintenance cushion. Start building up the amount you put away every payday, and open a savings account that won’t be touched until you absolutely need it. You can also start thinking about a college fund for your child, even if you are still expecting. Schooling can be very expensive, so it’s never too early to start planning.

 

Appoint a guardian or executor

Once you become a parent, it’s imperative to create a will that contains your last wishes, including the names of those who will take responsibility for your child or children after you’re gone. It’s also a good idea to name someone to take over the duties of your estate. Think about your beneficiaries and how you’ll divide up your estate. While it’s not something that anyone wants to think about, it will go a long way toward giving you peace of mind now.

Planning for the future can be frustrating and stressful if you don’t have a good plan. Sit down with a financial planner or an accountant to go over your preparations, keep communication open with your spouse or partner, and think about what your family will need down the road, not just in the present. With the right preparations, you can ensure that you and your loved ones will be well taken care of no matter what life throws at you.

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