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Financial Advice for New Families
If you are like most modern families you are going to feel the tugs and strains of making your budget. There are many ways for reducing expenses in order to “get by”, but what about the future. Most financial experts recommend that new families begin making some financial arrangements before the baby arrives.
It begins with identifying needs. Isn’t the new child the primary “need” for financial attention? Actually, most financial planners would demand that parents pay themselves first before spending money anywhere else.
What does that mean? Basically it asks the new parents to consider what they are going to need to save for college, emergency expenses and retirement. Having such plans in place and making sure that they are a primary concern of the budget can help to make the family’s present and future significantly wealthier.
The next biggest word of advice is to avoid the use of credit. Most experts suggest a twenty-four hour waiting period for purchases over $500 and a use of cash only for everything less than that amount. This means that unnecessary purchases will never make an impact on the future budget, and it also means no financial regrets.
The next most frequent word of advice for new families is to make sure to plan ahead. You can bring extra diapers, bottles and clothes in the baby’s bag, but if you haven’t put a will, life insurance or other emergency actions in motion you are not really prepared to meet the needs of the child. There are dozens of online tools to help draft perfectly legal and valid wills, and most attorneys can handle an uncomplicated will for roughly three to five hundred dollars in legal fees. Life insurance policies are simple to acquire, but a good investor is going to investigate their options for the best terms and yields (there are even some term policies that now offer rebates of some of the premiums).
Finally, all experts advise parents to save for the long-term, but surprisingly not all would say that the money should be designated for college funds only. Most new family budgets aren’t going to have loads of breathing room and setting aside retirement funds and college funds may not be possible. What is the most recommended solution? A Roth IRA, which allows funds to go towards college expenses, should be started to meet the needs of the parent’s futures as well as the educational expenses of the child.