5 Financial Planning Tips for Parents

The work of parenting can be all consuming – especially in the context of balancing busy work and social lives. Many parents feel that they should be doing “something” when it comes to financial planning, but don’t know where to start. Here are five planning topics for parents to consider:

  1. Life Insurance: Think about the expenses you’d want covered in the event of your death. These can include expenses such as a mortgage, college tuition, living expenses, childcare, and income replacement. Talk with your financial planner to weigh your options, policies, and coverage amounts.
  2. Estate: Parents of minors will want to consider a few things: who should care for the kids, how expenses will be covered, who should look after the kids’ money, and when the kids should get control over their own assets. Make your wishes known with your loved ones and formalize them through legal documents (such as a Will or a Testamentary Trust).
  3. Emergency Fund: With kids come unexpected expenses; missed work, medical bills, and childcare can all impair your monthly cash flow. Try to build up your emergency fund to create some elbow room for yourself for the next time a baseball flies through the window.
  4. Beneficiary Designations: Update your life insurance policies and retirement accounts to reflect your spouse/partner/children as primary or contingent beneficiaries. Or, if you’ve established testamentary trusts, identify the trusts. This will save time and expense in the event of your death.
  5. Education Saving Freebies: Check to see if your state sponsors a 529 plan. Some states have grant-based matching programs; some employers offer similar benefits. Be sure to take advantage of any such program to avoid leaving tax advantaged “money on the table”.

For impartial, unbiased advice, work with a fee-only financial planner on an hourly basis to tackle these projects one-by-one. Any questions? Let us know.

 

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