Planning for parenthood can be filled with joy. Especially, when you’re thinking of your future family, the adventures you’ll have, and the love you’ll share. However, some parts of planning are much more serious than others. In between looking at paint swatches for the nursery and touring preschools, parents need to examine their financial reality.
When it comes to organizing your finances, there is no predicting the future. But, you can plan for it. This is especially important when wondering how to stay afloat during emergencies. Today, we’re sharing parenting tips on how parents can plan for financial emergencies.
Start Emergency Savings
While most families have a savings account, all families need an emergency fund. A savings account can help you with big purchases such as vacations, back-to-school shopping, or replacing the tires on your car. An emergency fund is your family’s safety net during times where you face a much larger financial burden. For example, if you or your spouse are laid off or you are looking at a long hospital stay. A solid emergency fund is roughly equal to three months of your household’s income. It takes time to plan for financial emergencies and build an emergency fund. So, any time you get big payouts, like a hearty income tax refund, be sure to set it aside.
Prepay for Funerals
It’s an uncomfortable and unpleasant conversation to have, but pre-paying for your funeral expenses is an important topic to discuss. Not only does prepaying guarantee that your family will honor your memory and celebrate your life in a way you want, but it also helps save your children cash and prevent conflict during one of the most emotionally stressful times in their lives. After all, the average funeral sets families back between $7,000 and $9,000. This amount is based on factors such as where you live, whether you want to be buried or cremated, and what kind of memorial service you choose.
There are several ways to pre-pay your funeral costs. You can purchase a pre-need insurance plan through a funeral home or a more general final expense insurance policy, which offers the option of coverage for outstanding bills beyond your funeral. You can also set up a joint savings account with your children that provides the financial support to make your final arrangements.
Purchase Insurance
Now that you have a child to consider, insuring you and your partner’s lives and well-being can mean a more stable life for your child should a crisis occur. You will help ensure they can maintain their lifestyle when you purchase life insurance, disability insurance, and homeowners or renters insurance. These three are crucial for helping your whole family maintain a low stress level during an unfortunate event. Disability insurance is important if your work relies on your body. If a tragedy occurs, you could still have a cash flow even if you’re not working.
Work a Second Job
If you really want to fatten up your finances, you can weigh the pros and cons of getting a second job. It can be as easy as delivering pizzas or as complex as serving as a professional consultant. A second job is a great way to shovel money into your emergency fund, pay off debt or begin saving for child care. In today’s gig economy, many parents make extra cash driving for a rideshare like Uber, freelancing or working part-time online jobs. Unless you plan on working a second job forever, don’t count this incoming cash as part of your regular salary. Use it instead as a means to work on padding up your savings or paying down your debt.
Starting a family costs money. In fact, it can cost more than $200,000 to raise a child in the United States. Smart parents plan ahead as much as they can from birth to death, and from preschool to college. While financial planning may seem like a joyless chore, you’ll have peace of mind and extra time with your loved ones. So, the sooner you starting a plan for financial emergencies the sooner you can relax and enjoy life.
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