Your family is about to grow in size, and with that growth comes added costs. Some parents may wonder how they are going to manage their day-to-day expenses while still pursuing their family’s long term aspirations. Are you prepared financially for your baby’s birth?
The most important step in taking control of your family’s finances is creating a budget. How do you start? Try writing down all your expenditures for one month. Then, allocate those expenditures into broader spending categories such as groceries, gas, and your house payment. Then start looking ahead at new expenses such as childcare and baby items for your little one. Your income must equal your expenditures for your budget to be balanced. You may be surprised where your money goes!
Of course, debt is not a desirable thing. The challenge is to learn how to wisely borrow money. Check your credit report frequently to ensure you have optimized your chances of a high credit score in the event you need to borrow money to purchase a home or vehicle.
Creating a will ensures that your estate will be distributed according to your personal wishes. It also allows you to name a guardian for your child.
Life & Disability Insurance
Parents must be ready for the unexpected. Life and disability insurance can provide income for your family in the event of premature death or a disability.
Saving for College
The price of attending college is rising at an astounding 4% per year. If you plan to assist your child with college costs, consider establishing a 529 Savings Plan early in his/her life. You can check with a financial advisor or your banking institution to do this.
Longer life spans, fewer pensions, rising expenses, and the unknown of Social Security’s future benefits may mean your personal savings might be the bulk of your retirement income. Remember inflation: $1000 today is only worth $208 in 40 years at an inflation rate of 4%. No dollar amount is too low to save, and starting early is key. There are pre-tax and post-tax options. Always take advantage of your employer’s retirement plan and contribute to the company’s match if you are offered this opportunity.