When you become a parent, you start to become aware of the fact that your choices no longer affect just you or you and your spouse. With children to care for, you may be far more concerned about making the right decisions, including the right financial ones. The tips below can help you better manage your money for yourself and your family.
Get Out of Debt
This is a good time to start working on your debt because children only get more expensive as they get older. In particular, you don’t want to be paying off your own loans while you’re also trying to put your children through college. You may be able to cut your monthly expenses and your interest rate by refinancing your student loans with a private lender. By checking what your options are online is quick and easy, and it could also help you pay the loan off faster. If you have a credit card balance, work on paying it down as well.
Have Emergency Savings
You’ll feel much more secure as a family if a trip to the emergency vet, the need for a new transmission, or a health insurance co-pay doesn’t mean having to use your credit card. Instead, work on building emergency savings that will cover between three and six months’ worth of expenses. This should be kept in an account where you can gain access immediately when you need it.
Have an Estate Plan
Once you have children, it’s a good idea to create a will, which you can use to name one or more guardians for them. You and your spouse may also want to get life insurance. In some cases, a trust for children may be appropriate. You might want to meet with an attorney to discuss the level of estate planning that is appropriate for your family.
College and Retirement Savings
Some parents start a 529 savings plan and name their children as the beneficiary. There are tax advantages to doing this, but you may not want to put away money for your child’s college education if it means neglecting your own retirement savings. Keep in mind that your children will have access to financial aid as well as grants and scholarships, and you are also helping them by ensuring that you are financially secure in retirement. This can feel like a difficult balance, and you might want to meet with a financial planner at some point to discuss it.
A Money Plan for Kids
If your parents gave you a solid financial education, you probably already have some ideas of how you are going to do the same for your children, but if you are like most people, you probably were not taught much about money. You will be doing your children a great service if you regularly teach them about saving, spending, debt, credit, and investing in an age-appropriate way throughout their childhood. If you and your spouse have never had a serious talk about money and your attitudes toward it, you might want to sit down together, create a family budget and discuss what values you want to pass on to your children.