New parents have a lot on their minds, and financial planning may not be at the top of the list of things to consider. New parents, on the other hand, will be grateful if they have accomplished some financial preparation in advance after the effects of sleep deprivation have worn off. Financial planner Brad Led says that smart financial planning not only protects families from unexpected bumps in the road but also teaches children good financial habits. Smart financial planning not only protects families from unexpected bumps in the road but also teaches children good financial habits. As follows:
Three important financial planning factors for new parents or soon-to-be parents:
1#Plans for life insurance.
When you become a parent, it is imperative that you take steps to protect your family’s financial future. If you don’t already have a life insurance policy, you should consider getting one to guarantee that your loved ones will be taken care of in the event of your death. Keep in mind that even if only one parent is working, both parents need insurance coverage. According to Led with, term life insurance is a smart choice for new parents because of its cost and coverage for income loss in the event of the death of one of the parents.
2# ESOPs is short for Education Savings Accounts.
With the expense of college tuition growing on a yearly basis, it is never too early to begin thinking about college savings possibilities for your children. Consider establishing a plan, which enables parents, grandparents, and other family members to contribute money to an account that grows tax-free over the course of their lives. The revenues must be utilized for educational purposes only, and no other use is permitted. The specifics differ from state to state, so be sure to verify the regulations in your jurisdiction. Savingforcollege.com, American Funds, and College America are all excellent resources for further information about that plans.
3#Custodial accounts are those that are held in trust by someone else.
Depositing monetary gifts to children into custodial accounts is a secure and convenient way to store them with no constraints on their future usage. Expenses such as automobiles, housing, vacations, and other expenses may be covered by funds held in a custodial account. Custodial funds are often used to provide educational opportunities for children.
Custodial accounts help children learn about economic responsibility at the same time they are teaching them how to save, delay gratification, and work toward a goal. When your kid reaches adulthood, you may educate him or her on how to invest part of the money in a custodial account in stock purchases.
“Eventually, the youngster will acquire the financial wherewithal to purchase something that will benefit him or her for many years to come, such as a vehicle or their first apartment,” says the author. “It’s a terrific lesson in how money can be used to your advantage,” led to adds. Important financial planning choices for your family are made at various phases of life.
Whether you’re creating a budget to help you pay for daily expenses when you have children, looking for tax incentives to help you prepare for college, or making plans to financially secure your family in the event of your death, we can assist. Working with a certified financial planner (CFP) may assist you in adjusting your financial situation to fit the demands of your expanding family.