Every family has their own idea of what it means to be financially comfortable. Every family’s financial plan regardless of your situation is one thing all parents have in common is the desire to ensure their family’s financial future is safe and secure. But how can you be sure you’re doing the right things to keep your family protected?
In This Article
Planning for the Future
You may already have a general financial plan that you set when it was just you and your spouse, but financial planning takes on a different meaning when you have kids to support. Besides the basics of making sure bills are paid now, it’s essential for parents to make a plan for the future – especially a future you don’t see coming. We recommend starting with these estate planning essentials: If you are a single mother you can use these tips too!
- Establish a will and name beneficiaries: There are two main goals parents should have when it comes to setting up these legal designations. First, it’s important to name a guardian who would care for your children in the event that you were to pass away while they’re still young. You also want to set beneficiaries for assets, such as retirement and other savings accounts, so you can be sure that your spouse could access these funds without having to go through court probate hearings.
- Purchase or update life insurance: The purpose of life insurance is to give your loved ones the security that they would be protected financially upon your passing. It’s especially important for the primary income earner in a family to be covered. Most families are eligible for affordable term life insurance that would cover your lost income, ensuring that the surviving spouse could continue to afford major expenses, such as a mortgage and college education for your kids. Using an online calculator is an easy way to estimate policy rates that would fit your family’s insurance needs. This will give you a good idea of what to keep in mind when you start shopping around.
Budgeting for Life
Estate planning ensures that your family is protected in case of a situation you hope will never happen. But what about your family’s hopes and dreams?
You need an everyday budget that reflects long-term financial goals, such as saving for college, as well as closer goals, like being able to provide a homeschool education if you choose. Every expense adds up, whether it’s a homeschool space or school supplies, and each one impacts your financial future.
If you don’t yet have a family budget, this is the place to start. Once you have a basic budget and are tracking your spending, your family’s primary goals should be to eliminate debt and start a rainy day savings fund.
The rainy day fund should come first, before investing or other financial strategies. The reason why this is so important is that, even when you live within your means, major expenses can pop up at any time. Having a rainy day fund keeps you on track whenever this happens.
Of course, the best way to maximize savings is to cut your family’s costs. You can do this in both big and small ways. For a little extra help saving on everyday expenses, we love Fatherly’s recommended money-saving apps. Using these on your smartphone, it’s easy to save on clothing, food, and everything in between.
It’s also smart to look at your bigger financial picture to make sure nothing slips through the cracks. For example, when you file your taxes each year, are you claiming the child tax credit? Have you looked at your family’s health insurance policy recently to make sure it’s the most cost-effective way of paying for medical expenses?
Sometimes all you have to do is revisit your family’s overall budget to find those potential savings that are easy to overlook. Every family’s financial plan is different, and it’s also subject to change. Despite these differences, you need these financial planning basics to ensure you’re protecting your greatest assets: each other.