Financial Planning Tips for Parents: How to Get Started
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Planning for your financial future can be a scary thing, especially if you have kids or plan to. No one can see where the road will take them in three or five years, and that inability to know what the future holds is often what brings us stress and anxiety. Even if you begin saving now, there may be unforeseen circumstances at home that require you to dip into that money, from a broken water heater to new brakes for the car. Trying to plan for all the things life throws at you and still have enough for the cost of raising a child can be overwhelming.
Fortunately, there are several simple things you can do now to prepare for the future. It’s not enough to simply start a savings account anymore (although that is heartily encouraged); it’s also important to think about what type of account will work best for your needs, how to set a budget and stick to it, and how to evaluate your assets to figure out how much you’re worth and where you could possibly be saving money each month.
Keep reading for some great tips on how to start planning for your financial future.
Figure Out Your Income
Take a look at your income and think about whether it will be enough, especially if you plan to have children and you or your partner wants to stay home with them for a little while. Look at your spending, your savings, and think about what your needs will be with a newborn in the house. It helps to also evaluate whether it will be more cost-effective for someone to stay home with the baby than to pay for childcare.
Set a Budget
Setting a budget can help keep you and your family on track even when unexpected expenses come up, but it’s important to make sure the budget is one that will be easy for you to stick to. Make it reasonable; if you set out trying to cut your grocery bill in half the first week, it’s probably not going to work out well. Take small steps to achieve your goals and talk about them with your family so that everyone is on the same page.
It’s also important to take a look at what your spending is like right now and apply it to your future needs. Will having a bigger family make it necessary to find a bigger home in the next year or two? If you’re already spending a lot on rent or the mortgage each month, it might be time to consider downsizing if you can afford to give up the room. Use this cost calculator to figure out how much your home is worth.
Set Small Goals
Along with an attainable budget, you should have attainable goals that will help you get to where you want to be without all the added stress and anxiety. Think about what your next move should be; if you already have kids, would you like to start saving for their college funds? If you’re planning to have children, do you want to be a homeowner before the first child is born? Look at the big picture, but start small when it comes to planning for your goals. Open up a savings account and give yourself plenty of time to get to where you want to be.
Planning for the financial security of your family will make sure that everyone is well taken care of through the years, and if you start early enough, it will help eliminate stress on your end. Start with a well thought-out plan and ask for help from a professional if you feel overwhelmed or stuck. Or, seek advice from a family member or friend who has already gone through it.