To build a financially secure future for your family, it’s never too early to start a budget, save for emergencies and big purchases, and think about how you’ll provide for your loved ones in the event that you can’t be around to care for them. For some advice on building a strong financial future for your family — even when you’re young and just starting out — read on!
Move #1: Create a Budget
Once you’ve started raising a family, a budget will be key to saving money for the future, decreasing your spending, and repaying your debts — especially once you start putting money toward things like diapers, baby food, childcare, and higher health insurance premiums. A budget will help you to avoid accumulating new debt, while keeping you on track to building a strong financial future for your family.
As you create a budget for your family to follow, you could use mobile apps like Mint, YNAB, EveryDollar, and PocketGuard — or you could work directly with a financial advisor. A financial advisor could be an especially great resource to you if you’re not sure what to start, or you’re looking for personalized advice that will get your family on the fast track to financial success.
Move #2: Save for Emergencies and Large Purchases
If you don’t already have an emergency savings fund that you’re contributing to, now is the time to start building it. As a rule, you should aim to set aside three to six months of your family’s living expenses — but you may need to save more if you don’t receive a steady paycheck, or you’re at risk of losing your job. In the event that you lose your job or can’t work for any reason, your emergency fund should help you to pay for things like:
- Food, housing, and utilities.
- Transportation.
- Medical coverage.
- Debt.
- Repairs to your home and vehicle.
As you start saving for emergencies, Forbes recommends opening a high-yield savings account, money market account, or certificate of deposit (CD). If you work with a financial advisor, however, they can help you to choose the best savings option for your family.
It’s also wise to save for any large purchases you have in mind in order to avoid accumulating debt. For example, if you’re planning on buying a house, you’ll want to figure out what you can afford ahead of house hunting and then save accordingly. When you’re ready to start looking at homes, work with reliable real estate professionals like Castle Brokerage to help you find the perfect home for your budget. You’ll also want to reach out to a lender to go over your mortgage options and choose the right one for you.
Whichever mortgage you choose, know that you can ultimately save on the house by paying points toward the mortgage at closing. Points not only lower interest rates, they can also reduce mortgage payments. This is a great option for people who plan to live in their homes long term. To figure out how much money you can save with points over time, use an online points calculator.
Move #3: Plan for Final Expenses
When you’re young and raising a family, some of the last things on your mind may be your funeral plans and final expenses. If you were to die prematurely, however, your family would need to come up with a substantial sum to cover the cost of your funeral and burial — and they may be responsible for covering additional expenses like a headstone and burial plot. Cremations are more affordable than burials, but they still cost around $6,078 on average. If you don’t have savings or benefits that can be used to pay for funeral expenses, your loved ones may need to borrow money to cover these costs.
While final expense planning isn’t the most enjoyable of activities, it’s something you’ll want to tackle early on to ensure that your loved ones would be able to pay for your funeral expenses if the unthinkable should happen. For instance, you could start by purchasing a standard or prepaid funeral insurance policy — as both options can be used to cover your final expenses.
In some situations, a standard funeral insurance policy will be a better option for you and your loved ones. In the event of your passing, your named beneficiary would receive your death benefit — which could then be used to pay for your funeral costs.
The Road to Financial Security Starts Now
Planning is the key to financial security and success, and it’s never too early to start making some smart money moves that will benefit your family today, tomorrow, and years from now. By creating a budget, saving for large purchases and emergencies, and planning for final expenses, you’ll be on the right path to building a stronger financial future for your whole family. Looking for the perfect home for your family? Castle Brokerage can make the buying process a smooth experience for you! Call us at 408-409-3333.