Financial Planning for New Parents:
Tips for Saving Money and Protecting Your Future
by Sara Bailey
Becoming a parent changes your life in so many ways, and it’s impossible to be prepared for all of them. However, one thing you definitely want to be prepared for is the financial commitment of having a kid. After all, children are not cheap. According to a report released by the US Department of Agriculture, married middle-income parents will spend approximately $233,610 raising a child born in 2015. Note that this figure only accounts for the expenses of raising a child until the age of 17 and does not take into account the costs of college. Securing your family’s financial future isn’t easy, but it’s one of the greatest gifts you can provide for them.
Find Simple Ways to Save
The more you can save, the more security you provide for your family. One of the simplest ways to save is by reducing waste and cutting down on the resources you use every day — electricity, water, gas, etc. Not only is this an easy way to save money, but it’s also good for the environment. Furthermore, living conservatively sets a great example for children and prevents them from growing into wasteful people.
Use the following tips to conserve and save money every day:
● Install heat control film to windows in the summer to block ultraviolet rays and reduce the heat that comes through; you can remove the film in winter to help heat your home quicker and more efficiently.
● Reduce your reliance on city water with a rain collection barrel. You can use this water for your lawn, garden, and houseplants.
● Use public transportation to reduce your reliance on gasoline. Not only is this economical, but it’s also healthier. People who take the bus or train are less likely to be overweight, develop high blood pressure, and have diabetes,
Set Up Multiple Savings Accounts
As a parent, you have multiple savings goals. It only makes sense to have multiple accounts to keep them organized and stay on track. Not only is this a more organized way to handle your savings, but it also helps diversify your finances. You can put your retirement savings into a 401k or Roth IRA. If you have a high deductible health insurance plan, you can save money tax-free in a Health Savings Account you can dip into whenever there is a medical emergency in the family. You can save for your child’s higher education in a 529 plan while squirreling away extra funds in a money market account. And, of course, you can’t go wrong with a good, old-fashioned savings account for easy access to your rainy day fund.
It’s hard to think about worst-case scenarios, but as a parent, you have to do these tough things. Life insurance is the safety net you provide for your family should you die and can no longer provide for them financially. However, if your family never has to use your life insurance, you can then sell your policy to help fund your retirement or other future goals.
The earlier you buy your life insurance policy, the more affordable it is. Talk to friends and loved ones for recommendations on insurance companies or local agents you can consult. Learn which life insurance options are out there and which are affordable options for your family’s budget. Estimate the key costs your family will have in the years to come, including childcare, housing, and education. Talk to your agent about dual coverage for both parents for security.
Financial planning is your responsibility as a parent. If you want to save more without sacrificing too many creature comforts, make smart cuts on expenses like electricity, water, and gas. Diversify your savings strategies with multiple accounts for each goal. Finally, take the leap and invest in life insurance. It’s a safety net for your family in a worst-case situation.
Photo by Rhone on Unsplash httpss://unsplash.com/photos/WvtBA0jR9EI
