Financial Tips to Help Parents Stay on Top of Their Money

Careful financial planning is important and even more so when you have the additional responsibilities of parenthood. To make sure you’re handling your money well, you’ll need to practice a careful balance of taking care of immediate needs while planning for the future. Let’s look at some of the best ways to do that.

Know Where You Stand

Before you can make any meaningful decisions about your finances, you have to know your current financial health. According to Money Under 30, this goes a bit further than planning a budget. This evaluation entails determining your net worth using accurate figures for your debts and assets. There are even great software tools and apps that can help you with your calculations. When you have information like your debt to income ratio at hand, it makes it easier to pinpoint the way forward. One of the ways you can improve your financial health is by looking at how much you’re spending on homeownership by using a home-cost calculator, which takes into account the mortgage, estimated home value, and nearest metro area. If the amount is too high, it might be time for you to downsize.

Plan for Emergencies

While it’s traditional to have up to six months’ worth of your income in an emergency fund, it might be hard to see where you can start to build one. What’s important is that you simply start. You can open an account with the minimum amount and then add to it on a regular basis. If you’re looking for ways to increase your emergency fund, consider cutting back on some of your expenses where you can. This can include downgrading your cable package or using coupons at the supermarket. If you can net some extra cash from having a garage sale or a side hustle, that would be great, too. According to The Balance, high yield accounts are ideal for emergency funds, but money market funds and certificates of deposit can work well, too.

Develop an Investment Strategy

Apart from building your savings and cutting your debt, wealth accumulation is something to focus on. According to Investopedia, the one pillar you might be missing is an investment strategy. Unless you’ve invested before, this would be an ideal time to contact a financial advisor. They can help you determine your appetite for risk while helping you plan for financial growth. As a first-time investor, some of your options include mutual and index funds. The good news is that there are applications that can help you invest small portions of your money by rounding up on money that you’ve spent. That’s certainly an interesting way of investing without thinking about it.

Take Care of College and Retirement

It’s no easy task to save for both your retirement and your kid’s college fund at the same time, but it can be done. Experts recommend keeping your focus on retirement savings as much as possible. It’s best to take advantage of your employer match as much as you can. Bear in mind that Roth IRAs, if used properly, can be used to fund both your retirement and college education. While there are several college savings funds available, your state’s 529 plans tend to be most useful. There are a number of benefits to these accounts, but it can vary according to state or the type of plan, so do your research.

As a parent, you have a lot on your shoulders. Keeping on top of your finances can feel overwhelming at times, but once you’ve set a plan in motion, it will be one less thing to constantly worry about. A working system will ensure your needs are fulfilled and set you on a path of financial security for your family.

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