How to Start Financially Planning for Your Young Family by Kristin Louis

Whether you are a young family or plan to start one in the near future, financial planning should be a top priority. Yes, every couple wants to stay in the best financial position possible. But when you have children, it’s critical to know where your money is going. Not only will it significantly reduce stress and help you to live happy, fulfilling lives in the present, but it will also give you peace of mind knowing that you have a plan for the future (and all the uncertainty that comes with it). 

If you’re unsure how to financially plan for your family, read on for some practical tips on getting started:

Develop a workable budget. 
First of all, without a budget, there is no financial plan. Consider all of your monthly expenses, your income, and the amount you wish to save, and draw up a budget that tells your money where to go. Try to be as specific as possible when making your budget, and include every single expense you can think of. Also, try to give yourself some wiggle room in case your expenses or income change. 

Build emergency savings. 
After you have a budget that reflects your needs and income, create an emergency fund for unexpected expenses like car repairs, home repairs, medical bills, and so on. Set a little money aside from each paycheck until you’ve built up $1,000. From there, make it your goal to save up three months of expenses, then six months, then 12 months, and keep it growing from there. Also, when you have to use money from your emergency fund, be sure to replenish it. 

Plan your funeral. 
Yes, you need to plan your funeral, even if you’re in your twenties. The reason is that if you pass away unexpectedly and you don’t have a plan in place, then your loved ones will be left with the burden of planning and paying for your final arrangements. And funerals typically average up to $9,000 nationally. 

Taking steps to plan now will give you peace of mind knowing that your family won’t have added stress at such an emotional time. There are several types of funeral plans and insurance policies that cover funerals, so research your options to determine the best fit. 

Research (and purchase) insurance. 
Another major consideration for your financial plan is insurance. Auto insurance is required at some level in most states; however, spend time looking into your options before settling with the cheapest policy that provides minimal coverage. When you have inadequate coverage, all it takes is an accident to derail your financial goals. 

While not required, health insurance is critical, especially when you have kids. Regular checkups, vaccinations, emergency room visits, and other medical visits are not cheap when you’re uninsured. So look for a healthcare plan that provides what you need at a premium you can afford. 

Disability insurance is also worth considering, as it can cover expenses if you have to miss work due to illness or injury. 

Start saving for retirement and college. 
Finally, it’s good to think about your future and plan accordingly. Make sure you are contributing to a 401k, IRA, Roth IRA, and/or other types of savings plans for your retirement. And if you can afford to make room in your budget for it, start setting aside money for your children’s higher education, such as contributing to a 529 college savings plan. 

Financial planning is important for everyone, but it’s especially important when you have children. Remember to come up with a realistic budget and start putting money into an emergency fund. Also, start thinking about and planning for your funeral, and look into all the types of insurance your family needs. Lastly, do your best to save for retirement and your children’s higher education. 

Kristin Louis is a former advertising copywriter and has two rambunctious boys, 10 and 7 years of age. She created ParentingwithKris.com to share her experiences about the trials and tribulations of parenting.