A Closer Look at Successful Financial Management for Parents

Parenthood is an almost endless juggling act, even when it comes to your finances. And with our kids out of school and families facing the economic uncertainty brought on by COVID-19, many of us are juggling more than ever. To make sure you stay in good shape money-wise, LNJ Life Coaching looks at some of the key elements you should pay attention to when it comes to financial management.

Create a Budget That Works

The basis of any great financial management is an honest assessment of your finances. It would help if you looked at how much income you bring and all your monthly responsibilities. There are different financial management tools you can use to help you manage your money. One that many people have found helpful is the zero-based budget. In this kind of strategy, you have to allocate all your funds to different categories to know precisely where the money goes each month. When you’re creating your budget, make sure to include your debts and a repayment plan. According to WealthySingleMommy.com, it’s a good idea to write down the details of your debts and decide on a payment strategy. A standard method involves paying off your smallest debt first and then putting that money towards the next debt in line once the small one is repaid. 

Build an Emergency Fund

It’s hard to keep your spending under control if you never prepare for the unexpected. An emergency fund is meant to accumulate the money you’d need to take care of unforeseen expenses like car or appliance repairs. According to NerdWallet, it’s recommended that you have at least six months’ worth of expenses stashed away. The money should be easily accessible, but you can still get some reasonable interest rates if you use high yield accounts. If you’re wondering where you can find the money to put in an emergency fund, you can start with putting aside spare change. On a larger scale, cutting your expenses and finding a supplemental source of income will also be helpful. 

Boost Your Assets Column

When you created your budget, you likely would have looked at your assets. As you move towards financial stability, you should think about how you can increase those assets. According to Forbes, some of the best asset-building investments include the stock market and real estate. If you don’t own property yet, it’s best to research the steps involved. Finding out how much money houses have sold for in the area you like is an excellent place to start. You’ll also need to consider expenses like routine maintenance, repairs, and homeowner’s insurance.

Once you know what you can afford, you’ll learn how much to save for your down payment. All loans require a specified minimum for a down payment, including over 20 percent for some conventional loans. If you qualify for an FHA loan, on the other hand, your down payment could be as little as 3%, though you’ll need to purchase mortgage insurance. 

Create a College and Retirement Strategy

As a parent, you’ll be faced with the task of balancing the cost of your child’s education with your retirement plans. The strategy you take will depend on several factors, such as your child’s age, how close you are to retirement. Your child’s educational program would like to pursue if your child is young, which allows you to start setting aside a small amount every month because there’s still time to accumulate the funds you need. You will also be able to dedicate some money to your retirement without sacrificing the college fund. If your child is closer to college-age, you might have to focus on some other areas that could finance your child’s education, like scholarships or grants. 

There are a lot of things to consider when parents are managing their finances. It’s vital to start with an adequate budget and plan to reduce or pay off your debts. Don’t forget about your and your family’s financial future, either—build on your assets and make sure you’re putting money into your retirement and your child’s education fund. 

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