Financial planning is essential for every couple. Once you become parents, it takes on a whole new meaning and level of importance. Suddenly, there are more human beings who rely on you financially as well as emotionally. Between savings, childcare, setting up a collegefund, life insurance, and the unexpected, it can be overwhelming and hard to know where to begin. Fortunately, a lot of financial planning comes down to simply knowing what your goals are and what you need to do to get there.
Here are some helpful tips:
GrowYour Nest Egg
This is a must for every couple, regardless of circumstances or family size. Emergency savings is essential these days given the unpredictability of life and the periodic volatility of the economy and job market. You never know when you’ll be out of work or for how long, so creating a healthy nest egg is more than a basis on which to grow your future. It’s an important survival strategy, a hedge against massive debt and the additional expenses that come with having a family and little mouths to feed. Most financial planners advise growing your emergency fund before starting a family, but it’s never too late if you haven’t gotten around to it yet.
Preparefor Childcare
If you and your partner have decided you both need to work after the birth of a child, you should begin preparing for the cost of childcare, one of the most financially demanding expenses parents face these days. It’s scary to think that the average American family pays out over $10,000 a year for childcare. It becomes even scarier when you consider the shock to your financial system if it comes and you haven’t saved or made some financialdisposition to help defray the cost. Unfortunately, if you’re in that boat, there are very few cost-saving options.
Hiringa full-time sitter or nanny will, on average, cost you almost $30,000 a year. If you’re unable to save enough before your little one starts daycare, it may be time to reconsider your or your partner’s work situation. Maybe one of your employers can work out a flexible schedule that allows one of you to work from home on certain days, or perhaps work half-days. If not, it may be worth it to explore the gig economy for flexible, work-from-home opportunities that are in line with your skill set and experience.
Your Health Insurance
Manyyoung couples go with a healthinsurance plan that comes with minimal costs;it’s a common thing among young people in general. However, as your family grows, your health insurance needs change considerably. Bear in mind that babies need plenty of care during the early years; children pick up lots of germs at daycare of school, so you’llneed a health plan that covers all your requirements. Bear in mind that a family plan will come with higher premiums, but it’ll benefit you in the long run in terms of deductibles and copays.
LifeInsurance
Alife insurance plan is a safety net for your family, a financial investment in their personal well-being should something happen to you. It’s important to understand the different kinds of policies available and to tailor a life insurance policy to your needs.Termlife insurance is the most affordable and coversyou for a given period of time. If you die within the term of coverage, your beneficiaries receive a payout. If you’re unsure about the specifics about term life insurance or want to get a quote based on your needs, checkout this guide, which explains term lengthsto consider and even provides a rate calculator. Whole life insurance, meanwhile, covers you for your entire life and includes an investment component. Its cash value accumulates without being taxed and grows at a guaranteed rate. You can also sell a life insurance plan once you retire to free up cash.
Understandingyour financial needs, both present and upcoming, is crucial to establishing a logical and effective financial plan. As a parent, you can count on needing money for things like child care, health insurance, life insurance, and college costs. Consult a financial adviser to help determine how much to allot for each of your financial needs and your best options for doing so.