5 Financial Tips for Parents
Being a parent means a lot more than just soccer games and Band-Aids. You have to plan for the worst and ensure your children will be taken care of if anything should happen. Here are five financial tips for parents to plan for the worst.
Something you instilled in your children at a very early age is the importance of working with others and your finances are no different. As you get older, it becomes especially necessary to share the burden of your finances if you have a partner. That doesn’t necessarily mean you have to both pay all of the bills together, but it does mean sharing information. Make sure that everyone knows how to access financial information, and how to manage the household bills if something should happen.
This also goes for your children. In the case of an accident, do your children know how and where to find important documents? You can also give a close friend or family member access in case of emergencies.
Going along with working together, it’s a good idea to make sure you are both listed on all accounts and titles to make the transition easier. When both of your names are on all financial accounts, transitioning after a trauma is a lot easier.
If you don’t have a partner, consider putting a trusted friend or family member on your main account for easy access if you are injured or incapacitated.
Get Things in Order
It’s incredibly important to plan for the worst when you become a parent to ensure your children are taken care of. Even if you’re still a young parent, you need to make sure your estate is in order and everyone knows your wishes. Ensure that your will, living will and insurance policy beneficiaries are up to date to make things easier if the unexpected happens.
Both parents should have life insurance policies to take care of any death-related expenses. Consider getting disability insurance as well.
Save, Save, Save
This tip can’t be stressed enough for parents, especially in this economy. Sometimes it’s not feasible to put money away when you need it now, but every penny counts. You can setup automatic transfers of a small portion of your paycheck and it’s like you never had it in the first place. To make it even easier to keep that rainy day fund, put it in an account you don’t have quick access to, at another bank for example. What is out of sight is often out of mind.
Also keep in mind that saving for retirement always beats out saving for college. Even if you want to fully fund your child’s college education, you can do so with inexpensive loans if you need to. Retirement doesn’t work the same way.
Pay Down Debt
Work to pay down any debt you have, starting with high interest accounts such as credit cards. Once you’ve tackled your credit card debt, start moving onto other debt like cars and mortgages. If your income gets cut in half, it’ll be a lot easier to stay in your house if you own it, free and clear.