If you are preparing to start a family, this piece will really help you start a family successfully without any form of mishap.
Having a child is one of the most momentous, and expensive, decisions a couple can make.
When investments become emotional rather than fiscal there is always more to consider than just numbers, after all.
With rising tuition fees, shelter and food prices pushing up the cost of raising children year on year, taking the time to get your money in order can make the transition a much smoother one, ensuring a more secure future for your growing family.
First, assess your overall financial, and personal, picture.
Do you plan for one parent to stay at home and raise the children while the other provides for the family?
Will you both work?
These are important considerations you’ll want to discuss well in advance.
It may be necessary for one or both parents to gain further education or training in order to create a steady income that will comfortably support a family.
The best time to do that is before a child is born.
It’s certainly possible to go back to school after the birth of a child, but the demands on time and emotional energy make it more difficult.
Couples with a stable income need to consider their long and short term financial plans.
Long term plans include deciding on housing.
A mortgage is expensive, but when compared to the cost of long-term renting, buying a home may be a better option.
In the short term, couples will need to look at the costs associated with their banking, and assess their savings whilst checking account rates to be sure they are receiving the best return on their money.
Next, it is important to begin creating and building savings accounts.
One account should be dedicated to a liquid emergency fund – a source of cash accessible in case of a vehicle breaking down; a sudden illness, or other unexpected expenses.
An emergency fund should contain at least three months’ living expenses and be readily accessible.
A second account should be considered to pay for long-term costs, like the education of children.
Since traditional savings accounts usually offer very low-interest rates, it’s best to consult an investment counselor about the best way to build an educational savings account.
Many brokers offer low-minimum-contribution accounts for young families which allow savings to grow over time.
Since educational savings accounts don’t need to be as liquid, it’s possible to receive a higher return on investments over the long term using various investment tools like money market accounts and mutual funds.
Health and life insurance become of prime importance when planning a family.
The medical bills associated with having a child can be a shock, so health coverage is critical to most family’s financial stability.
Prospective parents should also consider drawing up a will as early as possible, as it is important to appoint a guardian for your child in case you and your spouse are no longer around to provide primary care.
Finally, if as Neil Postman described it, children are the ‘living messages we send to a time we will not see”, then with sensible financial planning, you can help ensure that message gets through clearly, leaving you free to experience the joys that come with beginning a new phase of life and your children well placed for a prosperous future.