Wise Moves for Young Families

Once you have children, a new sense of responsibility takes over. With a small person depending on you, you want to do what’s best for your young family. Here are a few wise moves to consider.

Begin with a Budget

To get your budget started, find out where your money is going. Keep track of every dollar you spend. You might be surprised at how fast miscellaneous expenses add up. Then, look for places to cut back to free up some extra cash for saving and trimming debts.  Don’t forget child care expenses if you’re a new parent.  Check out our Money Basics budget spreadsheet or go to www.mint.com¥ for an online solution.

Manage Your Debt

Mortgages, car loans, school loans and credit card debt can add up fast. Having too much debt can make it hard to get ahead. Read Managing Your Debt for helpful ideas or contact a Town and Country banker for personal assistance.

Save for College and Retirement

If one of your goals is to help finance college for your kids, it’s best to start saving while your children are young. Consider setting up a college fund for your child and deposit any financial gifts you (they) receive.  But don’t let saving for college take the place of saving for retirement. You’re likely to need a lot of money for a comfortable retirement. If possible, set aside money each month for both goals.

Consider Your Health Care Coverage

If you’re a new parent and before the baby arrives, check your health care plan’s maternity and pediatric coverage. You’ll want to know if there are any out-of-pocket expenses you should budget for. For instance, does your policy provide for well-baby care? If not, you need to be prepared to cover such costs yourself. Note that if the spouse whose employer provided the family’s health care coverage is giving up his or her job, the family will need another health care plan.

Establish an Emergency Fund

Work on putting three, then six and finally up to eight months’ worth of income into a savings account. Then you’ll have a cushion if something unexpected happens.

Prepare Your Estate Plan

The imminent arrival of a new baby may not seem like the time to look at your estate plan. Yet, responsible parents will want to make sure their new arrival will be taken care of in a worst-case situation. Check your life insurance coverage to see if it would provide enough for your child’s future, including college. You may have to budget for higher premiums to protect your family’s future financial security. Consider purchasing disability insurance in case of an accident or illness. And parents should update their wills, if necessary, and choose a guardian for the child.