Nevertheless, children are certainly a blessing and bring with them both hope and the promise of change.
For young married couples, employing several sound financial strategies early on can make the transition to family life and beyond easier to manage. The following are among several that your family can consider.
If you don’t own a home, buying one may prove to be the best investment that you can make. It is a long-term investment that can yield begin financial benefits as you age.
Most young home buyers take out a 30-year mortgage. It is an affordable option that has made home ownership possible for millions of Americans. At the same time, plan to pay off your mortgage sooner, rather than later. You’ll save more money in interest costs than you would gain in pouring your money into investments.
Use Credit Wisely
Your plans can quickly sink if you use credit foolishly. Running up debt will take money away from other expanses, deplete your savings, and expose you to financial ruin.
By all means use credit cards, but plan to pay off your bills every month. Moreover, shop for a credit card that provides rewards or cash back to enjoy some of the benefits that they offer.
Save for Retirement
You’re in your 20s, married, and just starting out with a family. Retirement is about 40 years away and that day may seem too far away to worry about. But, retirement will come and saving for it can be a big challenge.
Begin to sock away money toward retirement while you’re young and you won’t have to step up your saving as you get older. Even a few dollars a week can turn into a large amount many years later as the miracle of compounding interest takes place. If your employer offers a 401(k) account, you should participate.
Fund College Education
Your son and daughter in arms is so cute. In 18 years, that babe will be a young adult and ready to explore his or her world. One option will be college and those costs are simply prohibitive for many families.
Set up a college savings account while your children are young. Invite grandparents and families to contribute. Set aside at least $25 per month to start, raising that in increments as they grow older and as your income increases.
Your Insurance Needs
Everyone needs insurance. You insure your home, your car, your health, dental and other risks. You should also insure your life and your spouse’s life. Obtaining insurance while you are young is more cost effective than waiting until you are in your 30s and 40s.
You cannot insure for every contingency, but you should provide enough coverage to keep your young family financially set as they grow up and go to college. That may mean taking out insurance to match up to 20 times your current salary. Thus, if you earn $50,000 per year, then insurance for at least $1 million is reasonable.
Every family should have an emergency fund or a stash of cash they can tap when absolutely needed. That cash shouldn’t cover Christmas and vacation funds, rather extraordinary expenses that are difficult to anticipate.
Every dollar saved for your emergency fund is money that you won’t have to borrow in a worse case scenario. If possible, begin saving enough money to cover an extended period of unemployment. You should also set aside money for car repairs, for medical emergencies, and for home repairs. If your parents are in a position to help, take what cash they gift and use that money to begin funding your special accounts.
Each year, you and your spouse should perform a financial checkup, one that can coincide with the filing of your tax returns. That may include meeting with your financial advisor or reviewing your cash position with a family member. With young children in the home, it is easy to put off this all important checkup, but it is also something that you should do to avoid headaches and heartaches later on.
See Also — 7 Financial Tips for Young Adults
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