Financial Planning For Parents: How To Get Started

Financial planning isn’t most people’s idea of a fun time, but it’s absolutely necessary for parents and parents-to-be. Whether you want to ensure your kids have money for college or you just want to make sure you can stay home with your new baby, there comes a time when you have to start thinking about the future and how sustainable it will be according to your income.

It’s also important to think about emergencies and unforeseen expenditures, from repairs to your home to broken-down vehicles. While it’s impossible to plan for everything, keep in mind that life will throw you a curveball now and then, and it’s a good idea to be as a prepared as possible. You might even want to set up a separate savings account just for these times so you’ll never be caught with a nasty surprise.

For some great tips on how to plan for the future when you’re a parent, read on.

Is one income enough?

If you and your partner are planning to have kids and one of you wants to stay home for a while after the first child is born, it’s important to consider whether or not one income will be enough to sustain your family. In some cases, you may be able to secure a part-time job from home or even start your own business to supplement the main source of income. Go over your monthly expenses and factor in the cost of having a new family member (one who needs diapers, clothing, and formula) to get an idea of how much money you’ll need to live comfortably.

Determine your worth

Determining how much you’re worth is important when it comes to estate planning and creating a will, something every parent should do. Go over your assets to figure out how much your home and other belongings are worth; you can start here.

Start a savings account

Having a savings account is essential, because it will allow you some padding for emergencies and surprise expenses. Not only that, it will give you peace of mind to have money set aside in case you or your partner suddenly loses your job. If you want to start saving for college expenses, it might be a good idea to open a separate savings account that will remain untouched when things come up.

Automate your payments

Many credit card companies and utility companies now offer automated payments to help you pay your bills on time. Not only will this keep you in good standing with your creditors, it will take one more weight off your shoulders every month and will prevent dings to your credit score.

"By automating your savings or debt payments, you are prioritizing your goals and forcing the rest of your life to fit around them," says Matt Becker, founder of Mom and Dad Money.

If you have a lot of credit card debt, it’s a good idea to learn to say “no” to new cards. It can be tempting to agree to a new line of credit when you’re shopping and are offered a discount on your purchase, but piling on more credit card debt isn’t a good idea when you’re trying to save for the future. Even a card with a low interest rate can lead to years of payments, and even one late payment can negatively affect your credit score for a long time.

Figuring out your finances and saving for the future takes a lot of work, so don’t feel like you have to do it alone. Ask for help from an advisor and/or accountant, and talk to a lawyer when it’s time to create a will or plan for your estate. With a good plan, you can feel safe and secure about your future and the future of your loved ones.

With thanks to Sara Bailey for this article

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