A beautiful feeling in the world is when you become a parent. You and your partner might have dreamt of this moment for a long time. But, parenting is not an easy task. There are many responsibilities and challenges that you have to face.
Many young parents often neglect financial planning, especially if they have a stable income at the end of the day. Earning a decent paycheck, saving some for your child’s future and everything seems right.
But, that’s not all. Financial planning is a long term process which keeps you safe from any financial instability. It is not about your retirement or how much you save. Here are ten financial tips that can help young parents lead a holistic lifestyle.
Do Not Make a Major Purchase
If you are a new parent, it is always essential to have some cash in your hand. It is the time when you must avoid making a big financial purchase. For instance, buying a brand new car or selecting a new house where you can shift.
All of these will end up exhausting your bank balance in a very significant way. So avoid it, unless it is absolutely something important.
Get a Life Insurance Policy
If you didn’t get a life insurance policy all this time, then get it done right away. No one likes to face any situation that leads to a tragedy, but life is very unpredictable. So, it is always wise to have a life insurance policy subscription.
The funds can help your family during hard times. There are many life insurance policies you can choose to put your money in. You can take the help of a reliable financial agent in this matter.
Say No to Any Kind of Major Loan
The lesser your liabilities as a young parent, the better it is for your finances. Many people exhaust their income by paying off different liabilities. Avoid bad credit loans and any other credit from a financial institution.
This is only going to put more pressure on your finances. Avoid using your credit card very frequently and especially to make big purchases. You will lose a lot of money in the process of paying off all the interest rate and other extra expenses.
Create a Household Budget
Having a baby is very expensive, and creating a budget for your household is essential. This is a great way to ensure that you don’t overspend.
A lot of people spend money while managing their household chores without even realising it. So, evaluate your requirements and determine the house budget every month.
Create Emergency Savings
As your family grows, it is essential to grow your savings. Create an emergency fund that you can use in times of hardships and monetary crisis.
This is often neglected because young parents are usually confident about their income and savings. But, having an emergency fund is always a great way to cover your family. This is even more true when you just had a baby.
Save for College
Every parent would want their child to get the best education and attend the best college in town, right? If you are also dreaming of the same thing, then start saving for your child’s college as early as possible.
The costs of sending your child to a college are very high and can burn a hole in your pocket if you don’t have the right savings. You must know that a good college’s average tuition and college expenses are anywhere between £15,000 to £42,000. This cost can go up, even more, depending on the institution.
Making a Will Is a Must
You might be thinking why a young parent would want to make a will, right? Well, in the event of your unfortunate death, when no one expects it, your child is going to inherit all the assets without any hassles.
It is a very tricky and long process for any child to take over all the finances of a parent if there is no will registered officially by their name.
Do Not Forget to Save For Your Retirement
Parents can sacrifice almost everything for their children. But, it is an essential part of financial planning that you save for your own retirement. Through this, you are also helping to reduce the burden on your children as you grow old.
Have enough savings to last you well through the retirement period. You can choose to invest in different assets or put the money in various diversified funds.
Investing Is a Great Idea
Many people are sceptical about investing their hard-earned money in equities or asset classes. Only 33% of Brits invest in the equity market with an investment amount of less than £27,000.
You must understand that working hard to earn money is going to bring you a stable source. But it will not help you grow the same.
To expand your wealth and revamp your finances, you need to have investments. So, investing little by little every month in shares, funds, and other businesses is going to give you a huge edge in terms of finance.
Take it Slow
Once you are a parent, things will be pretty hectic and move fast. But, this is where you need to take it slow.
Take one decision at a time and plan your finances with a composed mindset. Don’t rush through things to do everything quickly in life.
Be transparent about everything with your partner. Involve them in every financial decision you make. This will allow you to get much-needed help during a difficult time. Taking one step at a time is better to skip a few and fall later.
Financial planning for young parents is always an important task to engage in. It is for the benefit of your child, your family and yourself as well. If your credit score is poor that could also affect you adversely. Work on building good credit for future stability.
Keep these things in mind and you are sure to give your kid a holistic and comfortable growth.
Interesting Related Article: “A Brief Guide on How to Plan for Your Retirement“