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Planning for the future as a parent can be a scary thing, even when it’s meant to give you peace of mind. You might be unsure of how to begin, especially if you’re a new parent or if you don’t have much in savings just yet. The key to financial planning is to remember that it takes time and requires figuring out what exactly you want (and need) to do with your money. For example, you might want to consider planning for college or updating your living will; if not, you can think about the best way to invest, such as buying a home or other property.
Keep in mind as you get started that there are several different types of savings accounts, including special ones for college planning that have tax benefits. These days, you can take your financial planning to the next level with all the options afforded by technology, such as apps that help you stay on top of your credit score and bank accounts. This will help you make your financial health a priority.
Here are a few great tips on how to get started with financial planning as a parent.
Consider a term-life insurance policy
A term-life insurance policy can help you plan for your family’s future in the event of your passing. It lasts for a specific length of time and ensures a payout that will help your loved ones cover important expenses. Because a payout is guaranteed, your family members won’t be left wondering whether or not they can pay off their debts, which will give you peace of mind. Though you’ll be guaranteed fixed premiums, each policy will differ according to the policyholder’s situation, so talk to get a quote that reflects your specific needs.
Start planning for college and beyond
College can bring a lot of expenses for parents; tuition, books and supplies, housing, and even parking passes all come with enrollment, and none of it is cheap. Many parents start a savings account specifically for their childrens’ education, while others opt for a 529 account that comes with tax benefits. Be careful about the route you choose, however; a 529 account could have stipulations that lead to repercussions if it’s not used by a certain date, and it has to be used for school. So, if your child decides not to go to college, you could have a problem on your hands. Research some options to figure out the best one for your needs.
Ask for a little help
If you’re a new parent, consider asking grandparents or other family members to help you set up a savings account or emergency fund by contributing there instead of buying baby shower gifts or toys. This is a great way to help your loved ones feel involved, especially if they live far away and won’t be able to spend time with your child, and it will help ease your burden at the same time. You can use the money to help pay for expenses or for a down payment on a home once you’ve saved enough (lenders usually require a payment of at least five percent).
Set aside a household fund
Every household needs a budget, but it’s just as important to have a house fund that can be dipped into when something breaks or needs to be replaced. Keeping up with maintenance and repairs can be overwhelming when you’re a parent; sometimes it seems like there’s always something that needs your attention, and those things can get costly. Setting up a household fund will help you pay for maintenance issues, like a leaky roof or poor ventilation, without putting a strain on your savings account.
Financial planning can be overwhelming and stressful if you aren’t prepared, so think carefully about how you want to proceed. By taking enough time to decide how to budget and save, you can avoid any issues and make sure your family’s future is well taken care of.
Source: Photo Find MCC