Being totally prepared for parenthood is pretty much impossible. With all of the ups and downs, there are bound to be surprises no matter how well you plan. Even so, it’s always wise to be as prepared as possible when it comes to your finances. Financial stability can save you a lot of stress and headache as a new parent and can build a more secure foundation for your new family. Indeed, it’s not just enough to ensure that your hard-earned dollars are spent wisely (such as on healthy products from Babyology that are worth the investment). Be sure to check these financial items off of your planning list, too.
Buying or Renting a New Home
If you plan on expanding your family, you may also need to expand the size of your current home. Deciding whether you rent or buy that new home can help set your family up for financial success, so be sure to weigh your options carefully. If you need a larger home but are also planning on moving again in the next couple of years, then renting a new home may make the most sense. Renting can also be a good idea when there is a shortage of available homes or when you are trying to rebuild your credit before buying. Some simple ways to boost your credit score before applying for a loan include paying down your debts and making on-time payments.
Paying Down High-Interest Debts
Using that last tip to reduce your debt could help you check this next item off of your financial prep list. Lowering your debt-to-income ratio will not only improve your credit and your chances of being approved for a mortgage, but it can also make it easier to access cash if and when unexpected expenses come up. An emergency fund can help as well and you’ll learn more about this later. For now, however, you should know that while paying down certain debts is smart, there is such a thing as good debt. These debts can help improve your credit rating as long as you make payments on time and can include a mortgage, business loan, or student loan.
Starting an Emergency Savings Fund
Okay, so now it’s time to talk about your emergency savings fund. Every household should have one but only 41% of Americans actually have enough in savings to cover unexpected expenses. In fact, most households don’t even have $1,000 to help out with emergency repairs and bills, but you don’t have to let your household be one of them. You can find simple ways to start saving money every day, like cancelling unused subscriptions, limiting your ability to make online purchases, and only investing in what’s truly good for your family. Then you can put the savings into your emergency fund. Want to grow your emergency fund even faster? Sign up for a high-interest savings account.
Taking Care of Your Business
If you’re a proud new parent and a 1st time entrepreneur, you’ve definitely got your hands full! However, there are things you can do to help make running a business as a new parent a little easier and manageable. In addition to making sure you have your business legally registered with the state (which may involve assigning a registered agent if you decided to go forward as an LLC or corporation), you need to make sure you’re staying on top of your taxes (this may require the need to make payments on a quarterly basis). Last but not least, make sure you’re taking a look at your finances on a regular basis; that way, you can address any problems or concerns before they turn into serious problems.
Planning for a Stress-Free Retirement
So you were probably expecting the next step to be more along the lines of saving for your child’s college or educational future. If so, you’re definitely not alone but you could definitely be making a huge financial mistake. That’s because while being able to pay for college can be important, it is not nearly as helpful for you or your children as planning for your own retirement. Without a retirement plan, you could end up struggling to make ends meet during your golden years, which would be stressful for you. But it can also be stressful for your children if they have to step in and help out. So save for retirement first or find a way to save for both. Then you and your children can enjoy more stress-free and financially stable years together.
While the financial items above aren’t all that should be on your planning list, they will definitely give your growing family a head start. Deciding where to live, which debts to pay off, which purchases are worth splurging on, and which savings goals to prioritize can help you lay the foundation for a stable financial future, along with proper budgeting. So, try to complete these tasks ASAP if you plan on becoming a new parent.
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GUEST AUTHOR: Daniel Sherwin