Raising kids usually turns out to be more than you could have ever imagined.
Plus, it’s important to not only think about your financial future but your kid’s financial future as well.
Whether you’re a parent in your 20’s, 30’s, or beyond, these are my recommended smart financial moves for parents.
Purchase life insurance
No one wants to think about dying, but it’s important to be prepared.
In addition to purchasing life insurance for yourself, you also want to make sure that you purchase life insurance for your kids too.
I start my kids’ life insurance plans as soon as they’re born to lock in cheap rates and then when they turn 18 I’ll be able to transfer it over to them and they’ll be able to keep the same rate.
Life insurance is one of the smart financial moves for parents because, in the event that something happens to you, you’re making sure your kids won’t be burdened with debt, AND when they become adults they’ll already have life insurance in place at an affordable rate.
Purchasing life insurance isn’t hard, time-consuming, or expensive either. You can get life insurance quotes in less than 5 minutes and depending on the type of life insurance you decide to go with you can pay less than $50 per month and qualify without having to get a medical exam.
If you’ve already been considering indexed universal life insurance here’s an Indexed universal life insurance pros and cons article that is worth a read.
As with all insurances, it is essential to shop around and do your research fully and look at reviews of the provider, such as this review of Globe Life Insurance. This way, you will ensure that you get the policy that is best suited to your needs, at a price that you can afford.
Purchase a house
Don’t get me wrong there’s nothing wrong with renting. I rented and moved frequently until my oldest was 12.
One thing I do wish that I would have done sooner was to purchase a house, though.
It allows your kids to have a house they can grow up in and make memories that’ll stay with them long into adulthood.
Purchasing a home is one of the top smart financial moves for parents because depending on the price of your home, you’ll probably have it paid off within 15 – 30 years, which gives the kids time to start their lives and always have a place to come back to while you can also prepare to comfortably retire without having to worry about making a rent or mortgage payment.
Plus, once it’s paid off it could remain a family home or if the kids find themselves in financial trouble in the future they could turn it into a rental property or even sell it to get a hold of some cash.
Besides, who wants to deal with the hassle of renting anyways? With homeownership, you don’t have to worry about someone telling you it’s time to move or making a monthly payment each month on something that will never be yours.
Start a retirement fund
It’s so easy to spend all of your money on your child once you become a parent.
However, while you want to make sure that your child has everything that they need, it’s also important to still think about your future.
From adding money to an emergency fund to saving for the kid’s college, it’s easy to put retirement funds on the back burner (especially if you’re self-employed and don’t have the retirement fund option through your job).
However, one day, the kids are going to grow up, move out, and start families of their own, AND you’re not going to want OR need to work as hard anymore. But, if you haven’t started a fund for your retirement you may find yourself having to work much longer into your golden years.
Starting a retirement fund could mean starting an IRA or 401(k) or it could be as simple as stashing some money into a savings account that you won’t touch until retirement. For others, it’s creating an investment portfolio.
You can do whatever type of retirement fund works for you, just make sure that if you haven’t started one yet you start saving for retirement ASAP.
Create a will
According to Legal Zoom, as many as 60% of Americans don’t have a will, despite the number of people creating detailed wills increasing due to the COVID-19 pandemic.
While understandably thinking about dying is unpleasant, as a parent, you do not want to pass away and not have a detailed will available for your children.
If you die without a will, the probate court will then decide what happens to your property. This means that the home you purchased and any savings you have may not go to whom you wish.
However, with an app such as Fabric, you’re able to plan for the unpredictable for free in about 5 minutes or less AND even make it legally binding.
This will give you peace of mind knowing that there will be no chaos surrounding who is to get what when you pass away. Plus, if your children are still underage when something happens to you, you can make it clear who you want their legal guardian to be.
Make a debt payoff plan
If you have debt, make a debt payoff plan ASAP.
This will allow you to stress less about debt and spend more time with your children making memories.
Plus, when you do reach retirement age, you will be able to enjoy life a lot more and work less since you will have very few recurring monthly bills.
These are the top smart financial moves for parents
Your life may feel like it’s just beginning. However, once you become a parent, it’s even more important to make sure that you’re making smart financial moves.
By making these financial moves suggested you’re going to have peace of mind knowing that your children will be okay once they become adults and you’ll be able to relax later in life and enjoy your grandkids.