PHOENIX--(BUSINESS WIRE)--When a baby comes home for the first time, new parents are often consumed with the daily tasks and expenses associated with feeding, diapering and sleeping – not so much on long-term money management and goals.
“New parents are eager for advice on topics like strollers or vaccinations, but future money matters are often overlooked,” said Mike Sullivan, chief education officer for Take Charge America, a national non-profit credit counseling agency. “In the long run, getting your financial house in order will impact your children far more than your choice of baby swing or diaper brand.”
Sullivan explains further with six moves new parents should make to ensure their family’s financial security:
- Establish an Emergency Fund – The cornerstone of every financial plan, an emergency fund is especially important for parents. The liquid savings account is intended for true emergencies, like covering the cost of a trip to the emergency room or a new air conditioning unit in the dead of summer. A well-funded emergency savings account should cover three to six months of living expenses.
- Pay Off Bad Debt – Now is the time to pay down student loans and get rid of credit card debt. If you’re in the habit of using a credit card, it’s time to stop accumulating debt and focus on prudent living for the benefit of your new family.
- Establish a Will and/or Estate Plan – While it may be hard to imagine needing a will or estate plan, they’re critical for protecting your children. A will and trust allow you to name a guardian for your children, ensure their personal and financial well-being, and protect your assets from probate and hefty taxes.
- Purchase Life Insurance – Life insurance will protect and provide for anyone who depends on you financially. A good rule of thumb is to purchase enough term life insurance to cover five to seven years of income. If you have significant debt or small children, consider increasing this to 10 years.
- Save for Retirement – Retirement may be decades away, but it’s never too early to start funding an IRA or 401(k). The retirement landscape is much different today than in generations past – Social Security is uncertain and pensions have all but disappeared – and young adults need to save far more than their parents and grandparents. Start funding your retirement now, let compound interest do its part, and enjoy financial security in your golden years.
- Start Saving for College – Your baby may be little, but every parent knows that children grow up quickly. Before you know it, your kids will be heading off to college, and a healthy 529 plan or other college fund will offset tuition and living expenses, and protect your child from the student debt that straddles many new graduates.
For more financial tips, visit Take Charge America.
About Take Charge America, Inc.
Founded in 1987, Take Charge America, Inc. is a non-profit agency that provides financial education services including credit counseling, housing counseling, student loan counseling and debt management. It has helped more than 1.6 million consumers nationwide manage their personal finances and debts. To learn more, visit www.takechargeamerica.org or call (888) 822-9193.
