Financial Planning Steps Every Responsible New Parent Needs
Blog post by Hazel Bridges of AgingWellness.org
Becoming a new parent is filled with a combination of joy and anxiety. Raising a newborn is exciting, but it’s also stressful to adjust to your role as a caregiver. After all, a tiny life is now your full responsibility and that includes the financial responsibilities. While child-rearing has its twists and turns for every budget, there is still a lot that you can do to make sure that your family thrives, now and in the future. Now that you are a parent, it’s time to think about financial planning and how to leverage all financial tools for your family’s benefit. Here is valuable advice from TCG Insurance Solutions on how to do just that.
Start with a financial plan
If you don’t know where you want to end up, you’ll never know the first step on your journey. That’s true for all aspects of life, including planning your family’s finances. It’s never too late to formulate a plan, but sooner is better especially when you have a little one on the way. Parenting magazine notes that children can bring new financial responsibilities to the table, so your budget should take all of your current expenses into consideration, but also be flexible for these future costs.
You may also need to determine if one or both parents are going to be working full-time, and if both, how you will cover daycare costs. Childcare can be expensive, even when you both have a full-time job, so you need to weigh these costs against the potential income you will earn by making this financial sacrifice. It may make more sense for one parent to stay at home for a bit or to ask family members to help out with childcare. Once children are in school, childcare costs can drop but you still need to think about other educational expenses, like paying for Pre-K.
Because your child’s needs will evolve over time, creating a plan requires thoughtful yet flexible consideration of all aspects of your life. You have to be able to anticipate the expected and unexpected, which can be a helpful skill to have as a new parent. These are proven Financial Planning Steps Every Responsible New Parent Needs.
Begin saving for tomorrow now
If you want to protect your family, establishing a savings goal and sticking to it is essential. From buying a home to funding vacations, hobbies and education, your savings plan should keep your family on track to achieve these important milestones. These goals should not only be reasonable and affordable, but also a major factor in your overall budget. Plan to make coffee at home, cut back on entertainment expenses and start clipping coupons. There are so many simple ways for parents to save money.
In addition to your regular savings, TIAA also suggests that 20 percent of take-home income be set aside for a rainy day. This emergency fund should be able to cover a few months worth of your expenses but can be used for other emergency costs, such as unexpected home repairs or medical bills. Getting yourself into the habit of putting such a substantial portion of your income into savings will set you up for a solid financial future. Being committed to savings can also help you model sound financial habits for your child as he/she gets older.
Another consideration for the future is to save for specific goals like homeownership or a new vehicle, or your children’s education. Obtaining a college degree will be essential for your kids’ career success, and today’s not soon enough to start putting money aside for tuition. Also start investigating schools, including those that offer online degree programs, such as those available through Phoenix University. Phoenix offers a wide array of programs, and fees are locked once students are enrolled, which makes budgeting for tuition a lot easier.
Get insurance for added protection
Life insurance is another way to protect your family’s financial future. As a new parent, your death has tremendous financial consequences. It’s not pleasant to think about but that’s life as a parent: sometimes you have to make yourself uncomfortable to care for your family. A life insurance policy, such as one available through TCG Insurance Solutions, is an important tool for this. You can also use your life insurance policy to help with other unexpected costs while still alive, like long-term care or medical expenses. You can sell your policy for cash to cover these expenses or even use the value to help with educational expenses for your child.
Know the value of your real estate
Just as paying off a mortgage is key to an insurance policy amount, knowing the value of your home is an important barometer of financial health. You should always have a general idea of your home’s worth. Job relocations can require that you think on your toes when it comes to selling your house, and should you ever need to tap into your home’s equity, it’s important to know what that equity figure might be. Stay connected with online sources of home values, and have a running tally of your outstanding mortgage balance.
You can’t plan for everything as a new parent but you can plan for a secure financial future for your family. Get started as soon as you can, so that you will be in the habit of saving and planning by the time your little one arrives. We hope you found out tips helpful on Financial Planning Steps Every Responsible New Parent Needs.
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