Whether your babies are just a dream or have made their great debut, planning for their future is likely your top priority. Here’s how to get started.
Plan with Today’s Budget in Mind
You already know your current salary and expenses. What you don’t know is how either of those may change in the future. As you’re starting your savings plan, consider where you are now. Don’t assume that you will be able to save more because you plan to get a raise future. If you do wind up with a significant salary increase, then you will already be used to living one way and can direct your financial windfall toward paying off debt or fattening your emergency fund.
Don’t Neglect Your Own Needs
One of the worst things you can do for your children is to fund their education but fail to take your own future needs into account. While paying for their degree is an admirable goal, if you have nothing left once you have bought the cap and gown, they will be the ones obligated to take care of you financially in your golden years. The Merrill Edge personal retirement calculator can help you figure out how much you’ll need to live comfortably depending on the age you plan to retire. Hint: It’s a lot more than college.
Set It and Forget It
The single easiest way to save money without budgeting is to simply have it transferred out of your account before you ever see it. Check with your bank about creating an automatic transfer on a recurring schedule. Each time you get a raise, up your amount so you learn to live without a higher income. If you can save just $50 per week, you’ll have nearly $8,000 at the end of three years. You can use this money to pay off debt, fund a 529 college savings plan, or invest. Check out Business Insider’s review of the best college savings plans.
Look for Ways to Save
There are plenty of ways to save dollars and cents that will add up in the long run. As an added bonus, many of the things you can do around your house are also environmentally friendly and will teach your children responsible stewardship. Installing high-quality storm windows and energy-efficient appliances, for instance, will save money off your monthly utility bills. Other small actions, such as reducing your water consumption, insulating the attic and garage, and fixing air and water leaks, will further lower your homeownership costs. Check with your cable and internet providers once each year for new specials, which can help you hold on to $600 or more each contract period – enough for at least a few freshman textbooks.
Avoid the “Overdo It” Personality
One huge mistake many new parents make is over-indulging their children’s wants and needs. Not only does this teach them that they can have anything they want, but it’s also wasteful and can put a strain on your wallet. Avoid the temptation to have the best of everything. When it’s time to buy a new vehicle, choose used. A used car or truck will have already depreciated, meaning you’ll lose less if you ever sell it. Buying a new home should be purchased with the same logical approach; however, depending on market conditions, it may be less expensive to purchase land and build. If your children grow up accustomed to living moderately, they will become adults who do the same.
These ideas can get you started, but talk to your financial advisor or local bank. These professionals can help provide you with personalized service and the most up-to-date information on investment accounts and savings strategies.