The Right Financial Plan Can Help Your Family Stay on the Right Track – A Guest Post

A note from Sara B. (the author of this guest post):  As a widow and mother of two, I know from experience how important it is for parents to have a strong financial plan. So, naturally, it concerned me when I read recently that only 25 percent of Millennial parents have life insurance and that only slightly more than half of parents have wills.

Her goal with this article is to explain the importance of financial planning for parents and give tips on how to get started.

Building your life one piece at a time is exciting, but it can become more and more difficult financially. According to GOBankingRates, the cost of living in the U.S. has increased by 14 percent, and median household incomes aren’t covering the jump.

Throw the cost of raising a kid into the mix, and Americans are even further from living comfortably within their means. The only way to get ahead and thrive is by thinking critically and coming up with a plan. Start developing your personalized financial plan today by using the tips below, so you can get back to creating the life you want for your family.

Down With Debt

Before you can start planning your financial future, you have to get rid of debts that casts a shadow on things like procuring a home loan or any other line of credit. Some debt is unavoidable, but if you don’t take care of it now, you’ll feel its effects later.

Calculate your personal debt-to-income ratio and start working toward lowering it. Your credit will get a boost from the dropped DTI, and interest rates on future lines of credit will most likely drop as well. If it’s out of hand, consider debt consolidation or meet with an advisor. A professional will help you get on the path to saving more for your future rather than paying for mistakes in the past. Once you’ve got a handle on your debt, it’s time to start saving for everything you hope to accomplish.

Figure Out Your Aim & Budget

Think about what you want for yourself and your children in the future, and what it’ll take to get there. You have to figure out the destination before you can map out a way there. Do you want to buy a home with a bigger yard, send your kid to a private school or start saving for college? Your goals can be short-term and/or long-term. Maybe you’re focused on providing for your kids after you’ve passed. All of these goals give you something to work toward and will help you develop a budget.

Even if you’re already running your home within a budget, you should revisit it in light of your goals. You should be putting money into a variety of savings accounts, but the first one you should stock is an emergency fund. Whether something happens to you, your home or your employment status, the last thing you want to do is stress yourself and possibly risk incurring more debt.

Life happens, so you should be ready for it. Protect your family by thinking ahead, and teach your children financial health by being a role model for them. They will be watching and will appreciate your budgeting down the line.

Life happens, so you should be ready for it. Protect your family by thinking ahead, and teach your children financial health by being a role model for them. They will be watching and will appreciate your budgeting down the line.

Prepare For The Future

Now that you’ve figured out where you want to save, it’s time to put it into action. Put some of your savings to use by investing, which is part of every financial plan. From contributing to your 401(k) to 529 college savings accounts, there are many ways you can invest in yourself and your family.

If you feel comfortable handling investments on your own, build an investment portfolio. If you prefer to have some help, look into using a robo-advisor, which offers a much lower fee than an in-person advisor. Save that bit of money to tackle another significant part of your future.

Additionally, get your estate planning handled as soon as possible. Avoid probate court with a living trust, protect your heirs’ property and designate a guardian to look after your children. If your children are grown, consider giving one of them control of your finances. 

You should also look into life insurance to lessen financial stress after your departure. Specific financial needs like childcare, debts, and healthcare costs can be alleviated with life insurance. Use a tool, like an online calculator, to help you determine which insurance policy is right for you. 

Everyone’s situation is different, including their finances. One thing that is consistent is the desire to do what’s best for the family. Make your financial plan today to help solidify a secure future for you and your children.

Image courtesy of Pixabay.