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.
- 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.
- 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.
- 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.
- 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.
- 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.
Sources:
https://www.fultonbank.com/Education-Center/Family-and-Finance/Financially-Prepare-to-Start-a-Family
https://www.citizensbank.com/learning/four-financial-tips-when-growing-your-family.aspx