Becoming a parent comes with added responsibilities, especially when it comes to finances. Babies add joy to your life, but they also add many costs. If you are preparing to welcome a new family member into your life, financial planning is a must. Stay on target by keeping these essential stay-at-home mom financial planning tips in mind:
Here are 4 Surprising & Helpful stay-at-home mom financial planning tips
#1: Even Stay-at-Home Parents Need Life Insurance
If you are preparing to raise a child with your partner, and they are the primary source of income for your growing family, you may think that you only need to buy one life insurance policy. However, as the Huffington Post explains, stay-at-home parents can also benefit from having some sort of life insurance policy and estate plan. Therefore, many experts recommend that both parents sign up for life insurance and create estate plans.
You may be wondering whether this step is worth the added hassle and expense. To decide this for yourself, just think about how the loss of either parent would impact your family’s finances. If your partner dies, for instance, could you afford your current expenses, or if you pass away unexpectedly, could your partner afford to pay for additional childcare? Having life insurance will provide critical safeguards, and you can also use certain types of life insurance, like term life insurance, to pay for lost income and college tuition.
#2: Parents Should Put Retirement before Education
Speaking of college tuition, many new or expectant parents make the mistake of stressing more about their child’s future educational expenses than they do about their own retirement. While funding children’s education is an important financial matter for parents to think about, funding retirement can be even more crucial for financial stability. Not to mention that there are quite a few ways to cover higher education expenses, from private loans to scholarships.
If you are planning out your own finances, create your retirement plan before you move on to creating a financial plan to help cover the costs of college for your kids. That way you can keep your kids from having to financially support you and your spouse in your old age, and you can keep you and your partner healthy, happy, and financially stable in your golden years.
#3: Real Estate Can Help Parents Save and Prepare
If you want a lucrative way to save for both your retirement and your kids’ college expenses, you should consider investing in real estate. While investing in real estate typically means purchasing a rental property and becoming a landlord, you can also invest in real estate-related stocks or even vending machines for commercial properties.
Still, SFGate notes one of the most effective, efficient, and effortless ways to generate income with real estate is via rental homes. It’s a source of passive income while you own it, and it’s also an opportunity to sell it for a profit at a later date.
#4: Parents Should Pay Off Old Debts with Purpose
When most folks find out they are expecting a child, they start making moves to pay off every cent of debt they owe. Now, this may seem like a wise financial move when you are expecting the added expenses of raising a child, but if you have to sacrifice savings to reduce your debts this may not be the best bet for your finances.
That’s because it is extremely important for parents to have savings, especially emergency savings, on hand in case unexpected expenses pop up. Otherwise, you could end up putting yourself even further in debt by paying for those surprise expenses, so be sure to pay off debt selectively. Start with any high-interest credit cards or loans and then work your way from there, saving big debts like your mortgage for last.
Financial planning can be tricky for a stay-at-home mom, but it doesn’t have to be overwhelming. Just be sure to cover the basics, like life insurance, retirement savings, and paying down debts. With finances secured, you can focus on enjoying your little one.
If you are a stay-at-home mom, please share your financial planning tips with us in the comment section below.
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