The Parent’s Guide to Life Planning and Financial Security
We all know that planning for the future is important, but the majority of middle-income Americans do not have a financial plan at all!
When you have kids, life planning becomes even more important. Being prepared for the unexpected is crucial to securing the welfare of your family for the foreseeable future. However, balancing your current lifestyle goals, retirement needs, and the future of your children is tricky. Here is a simple guide to get you started.
An estate plan ensures your family will be taken care of if you happen to die unexpectedly. While estate planning involves much more than writing a will, this is a good first step. Both you and your spouse should have a will to ensure your assets are distributed as you wish. Other things to consider when estate planning include naming guardians for your children, detailing your funeral and burial wishes, choosing beneficiaries, and ensuring your family has the financial support they need to carry on without you. Consider getting life insurance to provide your family with a safety net and relieve the financial burden that may come with your passing. You can use online calculators to estimate your life insurance policy rate.
Another important part of financial planning is establishing goals for you and your family. Some common goals include saving for retirement, buying a home, paying off debt, and putting money aside for your children’s education. Making goals will help you stay on track with your budget and avoid overspending or under-saving. When you make these goals, ensure that they’re measurable and achievable within a specific time frame. For example, your goal may be to pay off credit card debt before next year by paying an additional $500 each month.
Re-Investing in Yourself
When thinking of ways to provide financial security for you and your family, an MBA may be one of the best options. An MBA will not only help you secure more financial growth but it will also teach you valuable qualities of leadership. These skills will help to inspire and grow your employees and your family. Another added benefit of an MBA is increased job prospects and a growing business network that can lead to many other opportunities.
One essential goal that everyone should have — especially parents with dependent children — is creating an emergency savings fund. The purpose of an emergency fund is to cover unexpected expenses like unemployment, serious illness, or major home repairs. Set up a separate savings account for this money and ensure you can access it at any time.
In general, three to six months of living expenses is recommended. Just make sure you don’t overfund your emergency savings! Allocating too much money to your emergency fund means you’re missing out on saving for your other financial goals. At the same time, you may be losing potential interest that your money would earn in less-accessible accounts. Check out this article from Chime for help determining an ideal amount for your emergency fund.
Most financial advisors recommend paying down debt before saving or investing. This is because you’ll lose money if you’re paying more in interest on your debts than you’re earning with your savings. However, Bankrate recommends building up your emergency fund before paying off debt to prevent emergency expenses from adding to your debt load. Once that’s set up, aim to pay off high-interest debt first — doing this will actually save you more money than you could earn by investing in the stock market.
In order to meet your financial goals, you’ll have to create a budget. Start by tracking your expenses for a couple of months to determine your fundamental expenses and areas where you may be overspending. Dinner out, fast food, non-essential shopping, and subscriptions are common areas where people tend to spend a lot more than they think. Then, cut out expenses you don’t need, set limits for your spending in different categories, and ensure your excess income goes directly toward your financial goals. This will prevent you from frivolously spending extra money in your account!
If you lay awake at night worrying about the financial security of your family, creating a solid financial plan may be the remedy you’ve been looking for. Planning ahead is the path to peace of mind. Hold a family finance meeting with your spouse and get started on your life planning today.
For family-friendly tips, ideas, information and inspiration, connect with The Staten Island Family!