Summary
If you want to prepare your growing family for financial success, consider these financial planning tips to help set a strong foundation for the future.
How to Prepare Your Family for Long-Lasting Financial Success
When it comes to finances, current research suggests that millennials who are growing their families are facing unique challenges that previous generations never had to encounter. While financial responsibilities are nothing new for adults, things like inflation, a competitive job market, and overwhelming student debt are posing very real and serious threats to the financial security of millennials. For young adults who are planning to start or grow their families, we find it crucial to develop savvy and disciplined money habits. The financial planning tips below can help you to build a foundation to weather modern challenges and seek to build financial security.
Be Specific When It Comes to Your Goals
Before you can make a plan for your growing family’s future, it helps to be clear about what, exactly, you want that future to look like. The first step to developing a financial plan is to consider the bigger picture and set goals for what you want to achieve with your money. That could mean determining a specific amount that you want to save for retirement or putting aside enough money to support your children’s educational pursuits. Knowing exactly what you want to do with your money can go a long way in helping guide you as you build a wealth management plan for your growing family.
The key is to be as specific as possible with your goals. For example, you wouldn’t just set an amount you want to save for retirement. Rather, you’d also determine by what age you’d want to have that set aside. Then, you could break it down even more. How much will you need to save each year to hit that goal? What about each week? Specific number goals and deadlines can make it easier to hold yourself accountable and help make large and overwhelming goals seem more achievable. For example, saving $500,000 can seem like a herculean task, but breaking that goal down into savings of $1,050 per month can feel much more approachable.
Once you have a clear understanding of all your goals and the steps you need to take to achieve them, then you’ll be able to build out a budget that incorporates these steps into your everyday financial life.
Create a Budget and Honor It
Speaking of budgets, creating one is one of the most important financial planning tips you can follow when your family is growing. However, the key is to make your budget realistic so that you can truly honor it. A budget means nothing if it only lives on paper. Additionally, don’t “set and forget” your budget. You’ll want to continue to track your earnings and spending so that you can fine-tune your budget as you go to ensure that it’s working for you. Any time you experience a big life change or change in your financials, such as a new baby or a new job, sit down and revise your budget.
If you’re finding yourself overwhelmed or unsure how to proceed with your budget building, there are a plethora of online resources available at your fingertips to help you stay on track. You can use a budgeting app that will automatically track your expenses for you, or there are online budgeting tools if you need help getting started with building your budget.
Build a Cash Reserve for Emergencies
This is often repeated among financial planning tips, but it’s critical for growing families to have money set aside in the event of an unexpected financial emergency. This often becomes increasingly important if you have children who are depending on you. Having a cash reserve set aside can protect your financial health in multiple ways, the main one being that you won’t have to dip into your savings or go into serious debt to cover an unexpected expense.
You can start by working toward saving three to six months’ worth of living expenses. This is a general baseline for an emergency fund, though your unique circumstances may merit saving more. To determine the appropriate amount, we suggest considering factors such as your job security, your health status, and the number of debts you’re working to pay off.
Any time that your financial situation changes, we recommend you review your emergency fund to ensure that it still matches your circumstances. Life changes such as having a baby or buying a new home may mean that you add a bit more to your emergency nest to ensure your family remains protected.
Don’t Let Your Debt Get Away from You
As you may know from experience, debt can be a serious detriment to your financial security, especially for growing families. Sometimes loans and credit cards are useful at the moment – and even necessary at times – but they can lead to a cycle of debt that is difficult to get out of. No matter how good a credit card company’s offer is, be cautious and think through the repercussions of opening a new credit card. Read the terms and conditions closely, be sure you know exactly how the interest rate will be calculated and what hidden fees may be applied to your account.
What’s more, having good credit can be helpful, whereas having poor credit can severely hinder opportunities – for instance, buying a larger home as your family grows. So, as you consider financial planning tips to implement, be careful not to do anything that puts your credit at risk.
Utilize All the Resources Available to You
If you’re a young professional with a growing family, one thing you have that previous generations did not is a plethora of easy-to-access resources to help you make informed financial planning decisions. If you struggle to pay your bills on time, look into setting up auto-pay. If you struggle to track your spending, download a budget app that automatically tracks the comings and goings of your account for you. If you’re stressed about the idea of saving for retirement while raising a family, ask your employer how to make the most of the retirement savings accounts they offer. If you’d like a partner you can trust to help you navigate each phase of your family’s financial life, talk with a professional financial advisor.
Using Financial Planning Tips to Set Your Growing Family Up for Lasting Financial Success
If your family While the financial planning tips in this article can assist you in creating a thoughtful financial plan as your family grows and evolves, we believe strongly in the value of working with a professional financial advisor to build a more personalized strategy. At Aviance, we provide personalized wealth advice and investment solutions based on your needs and goals. Please contact us today to talk to one of our financial planners about building a financial strategy designed to support your growing family while also growing your wealth.
Disclosures
Aviance Capital Partners, LLC (“ACP”) is an SEC registered investment adviser located in Naples, Florida. Registration as an investment adviser is not an endorsement by securities regulators and does not imply that ACP has attained a certain level of skill, training, or ability. While information presented is believed to be factual and up-to-date, ACP does not guarantee its accuracy and it should not be regarded as a complete analysis of the subjects discussed. All expressions of opinion reflect the judgment of the authors as of the date of publication and are subject to change. Not all services will be appropriate or necessary for all clients, and the potential value and benefit of the ACP’s services will vary based upon the client’s individual investment, financial, and tax circumstances. ACP suggests that readers consult a financial professional, attorney or tax advisory professional about their specific financial, legal or tax situation. Past investment performance does not guarantee future results. All investment strategies have the potential for profit or loss, and different investments and types of investments involve varying degrees of risk. There can be no assurance that the future performance of any specific investment or investment strategy, including those undertaken or recommended by ACP, will be profitable or equal any historical performance level. Additional information about ACP, including its Form ADV Part 2A describing its services, fees, and applicable conflicts of interest and its Form CRS is available upon request and at https://adviserinfo.sec.gov/firm/summary/146597. For current ACP clients, please advise us promptly in writing, if there are ever any changes in your financial situation or investment objectives, if you wish to impose any reasonable restrictions to our management of your account, or if you have not been receiving at least quarterly account statements from your account custodian.
