January 16th, 2020 12:00am
For many people, financial planning can feel extremely overwhelming, and this is especially true for busy parents who already have their hands full raising little ones. Still, having a plan for your finances is a crucial step you need to take to protect your family now and in the future. So, if you’re unsure where to begin when it comes to creating a sound financial plan, you can start with the essential money moves outlined below.
Research Your Options When Buying a Home
Are you planning to become a homeowner? From looking at houses to getting the keys, the whole process can seem very stressful for first-time homebuyers, especially in terms of finances. That’s why it’s important to spend plenty of time researching your home and lending options, to avoid stretching your budget. Do an online search of homes for sale in the area of your choosing, and look at the current average sale price—which is $285K in Pomona—to give you an idea of what you can expect to pay in that city. After you’ve narrowed your search, contact a lender to explore your mortgage options. First-time homebuyers may benefit more from FHA loans, since there’s no need to put down 20 percent or more. Plus, FHA loan periods are flexible, whether you’re looking at 15, 20, or 30 years.
Start Saving for Those Rainy Days
You’ve likely heard this turn of phrase before, but you may be uncertain what those “rainy days” would really look like in real life. When experts advise people to put away money for a rainy day, they’re recommending that families set up an emergency savings plan, which can be used for various unexpected financial situations, like a family illness, sudden income changes, or any other crisis or occurrence that could throw your family’s finances out of whack. Well-prepared parents should have anywhere from three to six months’ worth of living expenses set aside in their emergency savings. Parents should also consider using an interest-earning savings account, but they can use other simple savings steps to prepare for a rainy day as well.
Create Additional Family Savings Goals Too
Having enough to cover emergency repairs (e.g., it costs $650 on average to repair a roof) or unexpected expenses can be a real lifesaver, but this shouldn’t be your only savings goal. If you have children, you should save for their futures, which includes setting aside money for future education expenses but can also mean setting up trust accounts, custodial accounts or even retirement accounts for your children, to provide a more stable financial footing. To give you and your kids some peace of mind, you should also take steps to meet age-related milestones when it comes to saving for your own retirement.
Use Budgeting Tools to Stay on Track
Whether you have a newborn or teenagers, you have enough on your plate already without having to worry about tracking every dollar and cent you spend or earn. Instead of relying on old-fashioned written budgets, consider finding a budgeting app for your smartphone that will make creating your household plan easier and sticking to it effortless as well. Apps like YNAB or Mint are constantly recommended by financial experts to keep the finances of families and individuals on track, and that’s because you can link your financial accounts to most of these apps. With accounts linked, your budget is instantly updated with any added income or expenses.
Learn How to Responsibly Use Credit
Smart credit habits are the keys to financial stability, and they’re also the keys to so many other goals in life. You can maintain a good credit score by paying your bills on time and only using 30 percent or less of your credit limits. Checking your credit report on a regular basis can help you keep track of these steps, but many of the budgeting apps mentioned above can make the task easier too. When you look at your report, you want to be looking for incorrect information or signs of fraud. For some extra peace of mind, you can also think about signing up for a credit-monitoring service, for protection against fraud.
Managing your money as a parent can seem complicated. If you can follow these simple steps, you can set your family up for financial stability, now and in the future.
Sara Baily is a widow, and mother of two. Thewidow.net
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