We all want to ensure our kids have the best of everything, and work hard to make sure they’re given every opportunity to excel. It’s important to grow your finances while saving for important expenses, financially preparing for the worst but expecting the best. Keep these important financial prep tips in mind and make sure your family is protected.
Budgeting is Crucial
The most important task to complete is budgeting. Crafting an airtight budget with accurate financial records is crucial. This will help you learn to live within your means, help you pay off outstanding debts, and dedicate funds to your various savings accounts. You may find yourself needing to pare down your regular expenditures; it may mean getting rid of the gym membership you rarely use, or stopping those weekly restaurant trips in favor of cooking at home. Use a site like Mint.com to help you budget better and have extra money left over for the fun stuff.
Growing Your Emergency Fund
Beyond your normal savings account, it’s important to have a dedicated emergency fund. While budgets are designed to keep your finances on track, life throws unexpected wrenches in our way. From car issues to unexpected medical bills, job loss to accidents, it’s important to have money stowed away for unexpected situations. Each month, set aside a certain dollar amount and have it funneled directly into your emergency funds account.
Paying Off Debt
It’s nearly impossible to grow your savings if you’re still under the thumb of outstanding debts. Make a plan today to pay off your debts. There are two typical strategies people use to tackle their payments. The first is called the snowball method; this strategy involves paying off the accounts with the smallest balances first. This is an especially helpful psychological method for those floundering under a variety of debt accounts. The alternative, the avalanche method, sees individuals paying off accounts with the highest interest rates first. This helps avoid penalties and racked up interest payments. Both methods come with their fair share of advantages, but it’s important to decide which will best incentivize you to tackle payments each month. If you feel your debt is unmanageable on your own, consider hiring a financial planner to help you come up with the details for a payment plan.
Teach Your Children
If you give a man a fish, he’ll eat for a day; if you teach a man to fish, he’ll eat for a lifetime. This old proverb is true of the financial world. Teaching your children essential financial strategies and habits is important, and will help them much later in life when you might not be around to provide real-time assistance. From balancing a checkbook to filing taxes, there are important things your kids simply won’t learn in school. Prepare your little ones for their adult life with important financial lessons.
Funeral Plans
No one wants to think about death, but it’s an unfortunate reality that deserves your attention, especially after you have children. What will happen to your loved ones? Will they be able to manage financially? It’s important to consider estate planning the moment you have dependents. This means more than drawing up a will. Do you want certain money set aside for your kids’ college education? Do you have a disabled dependent that will need long-term care? There’s plenty to consider, and that doesn’t even touch on the basics. Consider the costs of a funeral alone; the average burial costs upwards of $10,000—if you don’t have money set aside for this, how will your family manage these expenses? Some people have life insurance plans that cover potential funeral costs, while others look for specific coverage from outlets like BurialInsurance.org. Whatever you decide, it’s important to talk about your considerations with your partner or other loved ones.
