5 Fundamentals Parents Need for Financial Success
Parenting is not easy. In fact, it has been said that “parenting is not for cowards.” I can attest to that being a parent of three adult children. Parents often put their needs on the back burner to take care of the needs of their children. Often that means forgetting about planning for the future. This can be even more challenging for single parents, because they are doing it alone. Life will not always be like it is today, so you have to plan for the future. Here are five fundamentals you will need to help you to plan beyond today: 1. Budget 2. Life insurance 3. Debt Reduction 4. Savings 5. Retirement.
Money can be a challenge for many families. However, I believe it is not necessarily how much you make but what you do with what you make. Money management is a key component to raising a family and that begins with a budget. You need to know where your money is going. A budget “tells” your money where to go and lets you know if your income is more or less than your expenses. You have to get a handle on your money first, then you can decide how to proceed with the other important things in your life.
Once you get a handle on your money, you need to make sure that you set enough aside to purchase life insurance. If your budget shows that your expenses exceed your income, then you need to find a way to purchase life insurance. I would argue that there is not an expense more important than your life and/or the life of your children. Death is not an easy subject to discuss but it is a lot easier to deal with when your lives are protected.
Living with debt is a way of life for many people. Unfortunately, that means that many parents will have difficulty reaching their financial goals because of hardships caused by debt. Therefore, it is imperative that you have a plan to decrease and to eliminate your debt. You can begin with the smallest debt or the debt with the highest interest rate. It doesn’t really matter. What matters is that you eliminate this major hindrance that is blocking you from achieving your dreams. It may seem like a big task but it can be done. It takes patience, consistency, and commitment.
Life is full of unexpected events. Add children and that number multiplies. Many of those unexpected events require money to handle. If you do not have money saved in case of an emergency, then you will really be in trouble. Start saving 5% – 10% of your paycheck in case of emergencies and for things you will need. If 5% – 10% seems like too much, then start with a more comfortable amount. Saving will help you out of financial binds and will help to keep you from having to use credit cards and loans when emergencies happen. Start today!
Retirement might seem as far away as it is from here to the moon but it will be here before you know it. I know it is difficult to think about retirement when you are providing for the basic needs of your family. It also might seem impossible to save for retirement. But it is better to start with a little than to save nothing at all. Many employers have retirement plans such as a 401(k). They allow employees to have a percentage of their income deducted from their paycheck before taxes and before they even see it. Many employers will also match a percentage of what the employees contribute to their retirement plans. This is free money! If you are not familiar with your employer’s retirement plan, then ask about it and begin contributing at the beginning of the year or before.
People don’t plan to fail, people fail to plan. These five fundamentals can help you to plan and to live more comfortably beyond today. Will it be easy? Probably not but it will be worth it! Please contact me for more information about any or all of these fundamentals and/or how to get started. All the best!
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