One of the most commons questions among new families is where to start with your finances. There are a million ways your budget is being stretched and, I get it, the decisions seem endless. You have daycare expenses (can’t really skip that), groceries (those either), your 401(k), and medical bills. Those insurance premiums aren’t going down anytime soon, are they?
You want to set yourself up for financial success, and “do the right things” for your family. But what does that mean? And do you really need to start saving for college tuition when your baby isn’t even crawling yet?
Read on for help making those first household financial decisions.
Focus on your family’s financial future if you cease to exist
There, I said it. You need to get a Will, or estate plan, stat.
It’s shocking how many people skip this step. With or without you, your child will find ways to attend college when the time comes. They can get a job or a loan to pay for it. Here’s what they can’t do: make decisions about their future if you and your spouse pass away.
Let me spell it out. If you die in a fiery plane crash, and your kid is still a minor (under age 18), it would be up to the state to decide who take care of your child. You may have a parent or sibling who would lobby for their guardianship, but the final decision comes from the state if you don’t have a Will.
Use reputable sources to guide you
So you have some money saved up? Then hire an attorney you trust and have them walk you through the plan. If you’re short on cash, writing a Will doesn’t become less important. Most states or employers have programs for free or reduced cost legal advice.
They’ll ask you questions about where you want your money to go if you die, if you have guardians for your children picked out, your favorite charities, etc… Plans differ based on your state’s laws, which is why it’s important to find someone who understands your state’s legal system.
This can cost you a few hundred to a few thousand dollars to set up. And that’s ok. It depends on how complicated your situation is. The internet provides valuable resources, but each family is unique and there isn’t a substitute for rock-solid advice.
If we learned anything from Prince, it’s that without a Will, life can get super messy for those left behind.
Be prepared to review and update your insurance policies
Maybe you already have insurance policies from when you weren’t married and didn’t have kids. Every time you have a life event, you should be reviewing those policies with a trusted financial advisor. They can guide you to the right type of insurance and amount of coverage.
Term life insurance is one of the most affordable ways to provide for your family in the event of your passing. Yes, if you don’t use it you “lose it,” but if you don’t use it, that means you’re still alive. So….Overall, term insurance is one of the easiest ways to provide security for your child if you die and they end up in someone else's care.Click To Tweet
You have life insurance… right?
According to Business Insider, 75% of millennial parents don’t have life insurance. The reason? They don’t have time to sift through the options.
Bullshit. You and I both know that’s a crappy excuse to leave your partner or child financially unstable if you die. You don’t have the time to sift through the options!?
Some financial advisors can offer you insurance rate quotes. My opinion: Make sure they’re a broker, and not only offering one option. Here’s why: a company that doesn’t sell only their own insurance policies will have preferred relationships with multiple reputable insurance companies not associated to the firm. Those insurance companies are still vetted, but you get the benefit of comparing offers to find the best deal.
Your financial advisor can help you select the amount of coverage needed and the best premium rate. If you don’t have a financial advisor who offers insurance, fee-only advisors will still be able to help find the right insurance products and give guidance.
Totally stuck? Try PolicyGenius. It’s easy to get a quote fast, and the insurance companies are solid. As an example, I got term insurance when I worked a for a financial firm (and happened to have top notch advice at my fingertips). I re-ran my specifics on PolicyGenius and was given the same insurance company options at the same price point. So, I would personally trust their site.