Having Kids? Here’s How to Plan for Real Life

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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.

 

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5 Essential Ways to Keep Your Finances on Track

FinancesEveryone wants financial stability. However, many people struggle to keep things on track as they fall into debt and make unwise financial decisions. For people in addiction recovery, addressing financial health can be extremely beneficial because money issues are a common cause of relapse. So, if you’re a recovering addict, it’s more important than ever to get your finances in line. Here are some of the best ways to track your finances so you can stop worrying about the future of your money.

 

1. Determine Your Net Worth

 

One of the best ways to measure your financial progress over time is with your net worth. Net worth is a measure of your assets (everything you own) minus your liabilities (everything you owe). If your financials are in good health, your net worth will grow as you continue to earn an income and contribute to your savings. If your net worth is negative or starts to go down, this is an indication that you need to cut spending and try to save more. Take inventory of all of your debt and outstanding balances. Make note of interest rates and how much monthly payments are costing you. Your net worth will likely benefit from paying off some debts completely instead of contributing to interest each month.

 

2. Develop a Monthly Budget

 

The simplest way to stay financially healthy is to avoid spending more than you make. If your net worth is decreasing, then you need to cut back on your spending or find alternative sources of income. If it’s doing well, stay on track by budgeting your expenses and savings. The Balance recommends creating a budget to help you prioritize your money and plan for your future. Gather your financial statements, all sources of income, and list everything you spend money on each month. After totaling your monthly income and expenses, you can make adjustments by removing unnecessary spending or allocating more money into your savings.

 

3. Keep Your Bills Organized

 

Keeping on track of bills will help you avoid paying interest and late fees. Keep all of your bills in one place and open them as soon as they come in. You can even scan your paper bills to store them with your digital bills if you have the time and technical know-how. Don’t leave bills unopened because you’re already behind or you don’t want to face how much you owe. This can make your financial situation worse, especially if there are unexpected fees on them that you won’t discover until much later.

 

4. Make Cost-Cutting Lifestyle Changes

 

If you want to put more money in your savings, there are surely some sources of spending you can cut from your life. For example, eating out is expensive because you’re paying for the service, the cook, the location, the food, and for the restaurant to make a profit. Cooking for yourself costs a fraction of the price and ends up being much healthier as well. You can reduce electricity bills by using energy-efficient bulbs in your lamps, installing a programmable thermostat, sealing every inch of your home off from outside and turning down your water heater to about 120 degrees F. Look at your budget and see where else you can make appropriate cuts.

 

5. Build up an Emergency Savings

 

Putting some money away can save you and your family from falling into debt when something unexpected occurs. Perhaps you or your partner are out of work for a while. Or, maybe you suddenly have to pay for a massive car repair. Having an emergency fund gives you something to dip into when you need extra funds quickly. According to Listen Money Matters, your emergency fund should cover about 3-6 months of your current essential expenses. Set a reasonable timeframe for building up this savings and work on growing it back if you ever have to use it.

 

Having a plan to keep your finances in order will give you peace of mind and let you indulge once in a while without feeling guilty. No one likes lying awake at night pondering their debts and worrying about bill payments. Get your financials in order now so you can feel prepared for anything.