Having children brings on many new responsibilities, not the least of which is ensuring financial security for your whole family. It’s important to look at both the present and the future. Here’s some important financial advice for families to help you make responsible choices for you and your kids.
Plan for the Inevitable
Nobody enjoys thinking about it, but it’s in your family’s best interest to plan your funeral in advance. If something tragic should happen, it alleviates the decision-making burden during an emotional time. It’s also a way to ease the financial strain you would leave behind. Funerals cost an average of $7,000 to $9,000, depending on whether there is cremation or interment.
Being frugal with your spending will allow you to live a more comfortable life now and help you save toward the future. Always research expenditures, even for seemingly everyday items. For example, purchasing quality toys, furniture, and basic necessities for your infant ensures those items will last. Later, they can be passed along to the next child, sold at a second-hand store, or given to a friend or relative. In short: It’s a way to stretch your dollars and be sensible. For an excellent assortment of reviews, ratings, and articles on baby-related items, trBaby Know How. For stuff for older kids, we recommend you check out LA Parent. You’ll be pleasantly surprised at how much further money goes when it’s spent on quality things.
Create a Budget
If you haven’t already done so, a family budget is one of the most important pieces of financial advice for families. It’s a must have, as it functions like a like a road map for your money. Knowing exactly how much income you receive and where it all goes means reduced stress and more responsible spending, and it keeps you from trying to operate blindly. Begin by tallying your income for the month, and then list every expense. For period expenses, compute your annual total then divide by 12. Then, subtract expenses from income. Your objective is to come up with a zero balance. If money is left, put it in savings. If you’re in the red, cut some spending. The more solid expenses, such as mortgage and car payments, can’t easily be manipulated. The easiest places to cut are clothing and entertainment.
As Kiplinger points out, every time you add a child to your family, you should update your insurance policies — that includes your life insurance, medical insurance, and if you have any wills or trusts they should also be brought up to date. Some experts recommend considering disability insurance as well, which pays a portion of your income for a set timeframe if you should become unable to work.
Savings and Investments
There are several future expenditures for which you should be setting aside funds. First, you need an emergency fund to meet those financial challenges that pop up when you least expect them — cars break down, pipes leak, and refrigerators give out. By setting aside money for the curve balls life throws your way, you won’t need to derail your budget or borrow funds to get by. You can use an emergency fund calculator to approximate an amount.
You should also save for your retirement. How aggressively you save depends on how close you are to retiring, as well as what sort of lifestyle you expect for your golden years. CNBC has a handy chart to help you understand how much accruing interest affects retirement savings. And lastly, if you plan to help your kids pay for college, you should establish savings for each child. One suggestion is to explore a 529 plan, which allows you to save money tax-free.
With solid financial advice for families, you can ensure security both now and down the road. Think toward the future and make well-thought-out choices. You will set yourselves and your kids up for a more comfortable, stress-free life with responsible planning.
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