Whether you're still planning for a family or you already have one, being ready for family life is very important. You must look from different angles when you're family planning. Consider first thinking of how big you want your family to be. Once you're done with that aspect, think of how much it will cost you. Being financially ready to have a family is crucial when planning your future. You don't want to go broke while your kids are going to school and you and your partner are getting old, right?
Remember, a baby can add so many expenses. Even if you're still pregnant, whether you expected it or not, you have to pay for doctor visits, food and medications, the baby's essentials, and of course your labor process. Even if you have maternity benefits from work, it is still not enough to cover all your pregnancy and maternity costs. It is always important to consider long-term financial planning for your family. As difficult as it may sound, it will go a long way if you take it one step at a time.
So, if you're planning on having a family soon, here are four financial planning steps that you can take as early as now. These are proven to be effective and beneficial, not only to the family member who controls the expenses and funds, but to everyone in the family as well. Being properly educated with certain financial terms and planning will prove useful as your family continues to grow.
1. Get Life Insurance
A lot of people may underestimate life insurance and some consider it more of an expense than an investment. Getting life insurance is like getting an emergency fund for any emergencies in the future. This is the best way to consider your family's future and is a great long-term investment.
There are different types of life insurances available that you must inquire about. One in particular is term life insurance, which is known to be best for family finances. This type of insurance, for example, provides benefits upon you or your partner's death without any cash accumulation. Preparing yourself for the worst is not a bad thing, but should be taken as a precautionary measure for the benefit of your family.
2. Start Saving for Your Retirement
As early as you are engaged or still single, it is important to have started a savings for your retirement. You can't work forever, and neither can your partner, that's why it is important to set aside for your retirement fund. Being money-wise can help you save your entire family financially.
Retirement funds can be used for your leisure and vacations when you get older, but you may also use it to help your children or other family members if they need it. Your child may be eligible and can get a guaranteed scholarship to college, but this does not mean they are ready to go off on their own. You may need to help them with expenses while they're in college. Make sure you can still sustain yourself in the next several years, especially when you get old. You can seek advice from a financial advisor when it comes to retirement funds.
3. Start a College Fund
Elementary and high school education are mostly free of tuition. However, the toughest part, if in a financial aspect, when raising kids is when they go off to college. Unless they get a full scholarship to a university, you still need to be able to save some money for their college fund. Getting a plan that allows you to contribute funds that are not taxed as income when your child withdraws the money for school is also the best option. One example of this plan is the 529 plan. If you start as early as when they are babies, you will be able to save up for their ideal college school.
4. Entrust Funds to a Guardian
When doing financial planning, you should always be ready for some unexpected events, such as sudden death. Always put a guardian name for the child in your will who will properly manage funds for them. This person should be someone that you trust, because they will be responsible for every cent that you left behind.
READ MORE: How To Save Money on Life Insurance
