South San Francisco, CA July 8, 2020 by Sara Bailey, TheWidow.net
Whether you already have young children, are expecting, or are planning to grow your South City family in the near future, financial planning is essential. Not only does having control of your money help you to enjoy the present with less stress, but also plays a major role in how each member of your family thrives in the future.
And even though you are young, it’s important to make financial planning a priority. The sooner you start, the easier it will be to set the stage for your family’s health and well-being for years to come. While it may seem like an overwhelming endeavor, these simple tips can help you get off to a solid start:
Discuss your goals.
Communication is vital to a healthy relationship, and that includes talking about finances. Get with your partner to discuss your short-term and long-term goals so that you can recognize your differences and your common goals. When you establish an overall financial picture for your family, it will serve as a foundation on which to build your wealth. It will also help you and your partner to distinguish your roles along the way.
Come up with a budget.
Nothing is more important than budgeting when it comes to financial health. Develop a budget that includes all of your income sources and expenses (fixed and variable). Considering your goals, determine whether you need to cut expenses so that you can live within (or below) your means. Stick to your budget religiously, and be sure to leave room for saving for unexpected expenses and investing in the South City community.
Plan your funeral.
This one comes as a surprise to many young couples, but it’s important. Planning and paying for your funeral in your 20s or 30s can save your family a lot of financial and emotional hardship once you pass away. Funerals currently can cost upwards of $9,000 in the United States. Starting the process now will allow you to find the best price for a plan that meets your wishes as well as help you avoid higher costs down the road.
Get rid of debt and avoid it in the future.
As nothing can benefit your financial health like budgeting, nothing can harm it like debt. Whatever debt you and/or your partner have accrued (e.g., student loans, car payments, consumer debt, etc.), eliminate it as quickly as you can. Some advisors even suggest getting rid of all debt (except for a mortgage) before investing in retirement and college.
And of course, avoid getting into debt in the future. Be wary of impulse purchases, and only use credit cards if you can pay off the balance each month.
Prioritize your retirement contributions.
When it comes to retirement, shoot for maximizing your retirement fund contributions. The more you contribute now, the more your wealth will grow over time. For example, as of 2020, you can contribute up to $19,500 in your 401(k). If that’s not a feasible goal but your employer offers to match your 401(k) contribution, maximize the match. That is, if your employer offers to match your 401(k) contribution up to 6% of your pay, then contribute 6% of your pay.
Save for your children’s education.
Finally, consider your children’s future higher education. It’s never too early to start planning and saving in this regard. After all, who knows how much college will cost in 15 to 20 years? The easiest, most proven method is to open a 529 college savings plan, which allows you to contribute tax-favored funds for the specific purpose of higher education expenses.
There’s no getting around it: planning for your family’s financial future is critical. Remember to communicate with your partner about your goals, and develop a budget that you can abide by. Also, dump your debt, avoid it in the future, and start thinking about ways you can invest in your retirement and your children’s higher education. Implementing a few simple steps like these can put your young family on the path to financial health and well-being.
About Sara Bailey