5 Financial Tips For When You Start A Family

5 Financial Tips For When You Start A Family

Starting a family is an extremely exciting time. In addition to your bundle of joy, you will have a bundle of new expenses to worry about. Raising children is wonderful but can shake up your financial situation. Before starting a family, there are several ways to prepare your finances. Continue reading to learn five financial tips for when you start a family.

  1. Check Your Life Insurance

Now that you have children to provide for, you want to make sure that you can financially take care of them in the event something happens to you. The payout from life insurance is meant to make up for the loss of income so the family and children can cover any necessary expenses. Many employers offer life insurance packages as a benefit. Discuss with your spouse and family what a reasonable amount is for your life insurance. Once you sign up for life insurance, make sure you update beneficiaries and your estate planning documents.

  1. Build A New Budget

After the child is born, you may want to take parental leave from your job or transition to a stay-at-home parent. However, it is important to make sure leaves of absence and changes in employment are financially feasible. Any drastic changes in income need to be planned for accordingly to make sure your finances are not in jeopardy. Start by gathering the new income, medical bills, childcare costs, housing costs, and living expenses you will have. This will help you see if you can afford your family's future lifestyle so you can properly prepare.

  1. Begin Saving For An Emergency Fund

If you do not already have an emergency fund, it is time to start! An emergency fund can save you and your family from any hard times financially by being able to cover any unexpected bills or loss of income. With having to provide for a child, you want to make sure that you are not putting your finances at risk. For an emergency fund, a great rule of thumb is to save up three to six months' worth of expenses. When deciding on your emergency fund savings goal, use the proposed budget for once you have a child to make sure you will have enough in your new lifestyle.

  1. Start A College Fund

The cost of higher education goes up each year, so there is no telling what the rates will be when your child is ready to go off to college. The earlier you start saving, the more time you have for your contributions to take advantage of compound interest. As your funds stay in the account, they will earn interest that can grow upon itself. You can open a 529 plan so you and other loved ones can all contribute to a dedicated education savings plan.

  1. Prioritize Estate Planning

Trying to plan for a future where you will not be there to take care of your child can be very upsetting, but it's extremely important to have as a parent. You want to make sure your wishes will be followed through to take care of your child. In your estate plan, you can appoint a guardian to take care of your child if you were to pass away or be incapable of providing care. You can also indicate your power of attorney and health care directive.to make sure your child is taken care of financially, you can have your beneficiary information outlined in your estate plan.

Starting a family can take planning, especially financially. To make the financial side of starting a family easier, have an experienced financial advisor by your side. Our advisors at Genesis Financial Group are here to help you on the path to reaching the financial goals you've set for yourself and your family. Schedule your consultation today to get started.