By Sara Bailey
Looking to give your kids a bright start? If so, you should focus some attention on your finances. Achieving financial freedom will give your family more stability and instill priceless habits into your children for their own futures. Not sure where to begin? These tips can help.
Make Sure You Have Enough Life Insurance
The first financial task you should check off your list is calculating your life insurance needs. You can use online tools, such as a term life insurance calculator, to learn more about how much coverage you would need; experts recommend policies that are the equivalent of 5 to 10 times worth your annual income. Why should you explore term life insurance? In short: These plans come usually come with guaranteed financial payouts for your children and family and level premiums for you, so there’s no guesswork involved. However, you should compare different policy types and premiums to figure out which plan is best for you.
Start Paying Off or Paying Down Your Debts
For all parents, paying down debts is important, but you need to strike a balance between good and bad debt in order to have the best impact on your finances. “Bad debt” to carry into any major life change, including having a baby, can include high-interest credit card debt, and any outstanding debts that are taking away from your ability to save. To pay off debts faster, focus on those high-interest accounts and also on reducing your spending.
Comb Through All of Your Credit Reports
Developing a plan for reducing your personal debts is a wise move but you may also want to check out your credit report in the process. You can usually get free credit reports by contacting the three credit bureaus directly, up to three times per year. Once you have your reports, be sure to scan them carefully for any incorrect information or signs of fraud. The CFPB estimates that 1 in 5 people will find errors on at least one of their reports, so this step is crucial.
Start Saving Enough for Your Family’s Future
Financial goals are also important for parents, and yours should include savings plans for every aspect of your family’s future. This can include short-term goals, such as reducing your debt or creating an emergency fund, but can also include mid-term financial savings goals, like affording a down payment on a new home or paying for your children’s college. Of course, parents should think about some long-term goals as well, but we’ll get to those in a minute.
Find Budgeting Tools That Work for You
No matter what your financial goals end up being, you will need a budget to meet them. Budgeting can be tricky, especially if you’ve never done it before or have your hands full with other responsibilities. So look for apps and planners that take the work out of budgeting for you, and make controlling your finances less stressful. To get started with these budgeting tools, you will need to create a profile, link accounts, and input some additional financial planning information. Once those steps are completed, these apps will track your budget for you, and some can even make saving and investing your money easier as well.
Start Seriously Thinking About Your Retirement
Remember those long-term financial goals mentioned before? These goals boil down to one overall purpose: saving enough for retirement. This may seem like an odd financial step to mention for parents, but you have to think about your entire future if you really want to protect your children and set them up for financial success. Eventually, your kids will grow up and you will be older as well, and neither of you should have to stress about paying for unexpected expenses in your golden years, like housing, healthcare costs, and long-term care.
It’s never too late or too early to start planning for your family’s financial future. So, whether you are expecting, already have children, or just want to prepare for the prospect of parenthood, make sure you know where to start with your financial plan. Also, make sure you know what it takes to achieve all of your financial goals so you have one less worry in your life.