I recently had my first baby so financial planning has been on my mind. (Babies have college funds, what??? So many things to do besides diaper changing and feeding!) Whether you are a new parent or you don’t see kids on the horizon anytime soon, you should always have an eye on the future. Financial planning is, of course, an integral part of forward-thinking. It’s a chance to guarantee that your family’s needs will be met in the future and that they will be protected in case something untoward happens to you, such as sickness, death, or even sudden unemployment. With that in mind, consider these following financial steps from EK Careers that you can make today.
Look to the future.
You never really know what the future might have in store for you and yours, but some things are certain. It’s a good idea to start making concrete plans for the things that you can anticipate.
First, you need to think about your eventual retirement. After all, you want to be able to provide for your health care and lifestyle needs in old age without having to impose upon your children or be completely dependent on government benefits. So for starters, explore the many ways that you can start a retirement fund. Better yet, CNBC suggests starting early for that much-needed headstart to financial freedom.
Next, your children’s education is also something you need to think about. The cost of a college education is not one to be taken lightly. Thankfully, there’s also more than one way to save up for your kids’ educational expenses, which will undoubtedly take a huge burden off your shoulders when the time comes.
You or your spouse may also make a career move or two in the future. After all, workers who stay with a company longer than two years can potentially make up to 50-percent less than their peers. There’s always the prospect of starting your own business, at which point you’ll need to choose how to structure your operation. Operating as an LLC is a common choice for small businesses, as there are tax advantages, more flexibility, and less paperwork involved. Using an online formation service like ZenBusiness makes an otherwise tedious task much easier, including getting a registered agent, a requirement in Texas.
Make room for contingencies.
Of course, in the same way that you plan for the future, so must you have measures in place for emergencies. Insurance is one of the best investments you can make for such purposes. This runs the gamut from health insurance to life insurance.
While premiums may seem like added expenditures, risk advisor Chase Bassett notes that the benefits and the peace of mind that having insurance offer are more than worth it. However, you can actually save on your premiums when you opt to get life insurance or health coverage at a young age and in peak health. When scouting out life insurance, turn to online calculators to give you an idea of what you can expect to pay, or look for a reputable provider who can quickly set you up with a policy online.
An emergency fund is also a great thing to have. This is a fund that you should only access in legitimate emergencies, such as losing your job or getting your car stolen and the like. As a rule of thumb, such a fund should hold approximately six months’ worth of your total income, and while this may not be something that you can build up overnight, it’s undoubtedly a solid goal to have.
Invest in four walls.
Finally, you’ll want to start acquiring assets, which you can pass on to your kids in the future or even tap as a financial resource after you retire. With that in mind, your own home is a sound investment. If you’re planning to buy one, you’ll need to start saving now and get familiar with how down payments work.
Most mortgage loans require 20 percent down. Earnest money amounting to 1 to 3 percent of the sale price may also be required when you make an offer. While there are loans available that don’t require much outlay at first, know that being able to put down a significant amount makes you a more attractive buyer. What’s more, it makes it possible for you to get a better interest rate and maybe even avoid paying for private mortgage insurance.
Indeed, financial planning should not be something that you ‘may’ do as a parent. Rather, it’s a step you take to ensure that your family’s finances will remain healthy for years to come. Develop solid savings and investments based on your goals. These foolproof measures will undoubtedly help you and yours move towards a sound financial future.
Erica Kosa at EK Careers is a tech recruiter turned resume writer and career development evangelist with several years of experience in the engineering community and higher education. Reach out today for a free phone consultation.