Financial Planning Tips for Parents to Take Note Of
As a parent, you can probably agree that it’s pretty difficult to have a plan. Your plan for a quick trip to the grocery store turns into an hour-long fiasco with you defending the shopping cart. Your plan for a quiet family dinner out ends in your youngest spilling their drink twice and your oldest loudly announcing that they hate this place.
While these everyday events are out of your hands, financial planning isn’t. The following are a few ways you can get your finances in order that go beyond simple budgeting so that you can focus on the joyful (and sometimes chaotic) moments of parenthood.
Tackle Legal Steps
Since your children came along, you probably drafted your will so that it all goes to them. However, LawDepot explains your will is also the place to appoint a guardian to care for your children should you pass away when they’re younger than 18. This person is in charge of the health and wellbeing of your child(ren), including making decisions that are in their best financial interest and using estate money to purchase the necessities such as food, clothing, toys, school items, and other miscellaneous expenses that come along with children. When choosing, consider parenting abilities, health, and personality traits/beliefs.
If your will is established then there’s no question who gets what, but settling an estate is more involved than splitting it down the middle. Your children can handle this if they’re in their 20s, 30s, and beyond, but what happens if you pass away when they’re young? Who makes sure your children have access to all that you left behind to them? An executor handles the decision-making and sharing of info regarding the estate. You can name one executor, but in naming co-executors, you can ensure nothing is missed, whether due to lack of knowledge or overwhelming feelings of grief.
Get Insurance in Order
The arrival of children increases the need for insurance. Life insurance is an absolute must since your children will be the ones financially dependent on it should you pass away before they’ve become financially dependent adults. CNBC notes that insurance through work isn’t enough though since it likely won’t offer the coverage your family would need, and you run the risk of losing it should you leave or lose your job.
Term life insurance is the least expensive option for young, healthy adults, and it provides straightforward and sensible coverage. It lasts a certain number of years, after which it expires. Should you pass away, it pays out a lump sum of cash known as a death benefit.
One last type of insurance to consider is burial insurance. It covers the expense of your funeral arrangements, and any leftover funds can be used for outstanding medical bills, personal loans, and so forth. It’s a good time to think about your final arrangements, too, so that you can plan for the cost and adjust coverage accordingly.
Start Saving Money for the Children
By building up savings for your children now, you ensure they have a good start financially when they become adults and choose to go to college, work, travel, etc. You can start a savings account for your child, or create a custodial account that your child won’t have access to until adulthood. If you think your child will go to college, open a 529 college savings plan. It can be used for college, as well as K-12.
The easiest way to ramp up your savings is by creating a family budget so that you can work toward having funds left over each month to actually contribute to a savings account. Take a month or two to track what you spend. This will tell you where your money goes, what you can cut, and help you set weekly and monthly goals.
Most parents will tell you that it’s hard to make plans. They’re right, but financial planning is easy. Ensuring your child’s financial future is taken care of is a plan you can make right now. It gives you instant peace of mind, and you can then return to your regularly scheduled parenting.
Article by MomsBeyond guest writer, Josh Moore.