This contributed post is for informational purposes only. Please consult a business, financial and legal professional before making any decisions. We may earn money or products from the affiliate links in this post.
Family finance is significantly more complicated than sorting out your own finances as a single person. For one thing, you need to make sure that the money you have coming in is being spent fairly and sensibly to reflect everyone’s needs, even when times are hard.
For new parents, trying to navigate the unfamiliar waters of financial responsibility can be especially difficult. Things like insurance and saving that might never have occurred to you before your baby might suddenly become a priority.
Fortunately, in the finance world, it is never too late to improve your finances out and figure out the best course of action for your whole family.
Why You Need Insurance and Which Insurance You Need
As a single person, you might be more inclined to take on some risks than you are as a parent. For example, you might choose not to take out life insurance because you don’t have anyone relying on you yet. While this is a personal decision, as a parent you need to approach insurance from a second perspective: what will happen to your child.
Insurance is all about managing a risk factor: you buy house insurance to protect you from potential damage, you buy car insurance to protect you in case of an accident and you get life insurance to protect your family in case of your sudden death. Families should look at all of these cases and ask their insurers about other plans that may be effective too such as flood insurance, business or self-employment insurance and pet insurance.
Saving For Your Child’s Future
We all know that college is expensive and while your child may decide against going by the time they are old enough, it is something you should be financially prepared for just in case.
Over 18 years, you can save a significant chunk of money that can be put towards anything from tuition fees to accommodation, furniture and clothes. If you start now, it will be much easier to get used to the monthly payments into the fund and not have to worry later on. The benefit of saving over such a long time is that even if you don’t end up using the money for what is was specified for, it will still be there to fulfil another ambition.
Staying Out of Debt
Now that we have established how easy saving can be if you go slowly and save up over years, it should be said that paying off all your debts should be a top priority for all families. While some debt like student loans or a mortgage can be positive if they provide you with something you need, bad debt such as credit cards or payday loans should be paid off as soon as possible.
Start by listing your debts in order of the percentage you are being charged to have the money. By paying off the debt with the highest percentage first, you will be able to avoid paying as much interest and hopefully pay off the remaining debts you have a bit faster.