There’s a big difference in how you handle your finances when you’re single compared to what it’s like when you have a family. For starters, you can’t take the same kind of risks that you once could. Then there’s your partner, with whom you need to consult on all your joint decisions. On top of that, you need to consider your children’s needs in the short and long term, including the potential costs of education. The tips below can help you better organize your finances to start establishing long-term security for your entire family.
The Basics
Even if the basics of how to improve money management are familiar to you, it’s always worthwhile to review them and see if you could make improvements. If they aren’t familiar, which is the case for many, it’s never too late to change course. In a nutshell, you should have a budget, make a plan to pay off debt, and live below your means. It would help if you also had money in an emergency savings account equivalent to around three to six months of expenses.
Finally, it would help if you regularly contributed toward a retirement account. You can read more extensively on any of these topics online or offline. Remember that you need to do this planning in partnership with your spouse. Even if you have divided family responsibilities so that only one person is primarily responsible for the money, both adults need input and understand what is happening with the family finances.
Building Wealth
As much as you may be interested in building wealth when you are single, it becomes much more critical when you have a family. Building wealth means more protection for your family and flexibility, allowing you, your partner, and your children to choose work you love rather than grabbing any job that comes along because you need the money. One of the best ways to build wealth is through investing. Don’t assume that you have to have a considerable amount of disposable income to invest. With an online brokerage account, you can start with as little as $100.
Another option is house hacking. Real estate investment can be an excellent way to build wealth, but if you can’t yet afford to purchase a second property to rent out, house hacking can be your first step toward more traditional property management. It can be beneficial if, like the average household in the U.S., you spend around one-third of your income on your house. House hacking can help you cover your costs and generate additional income by renting out one or more rooms in your home while continuing to live there.
Protecting Your Family
A critical element of family finances is making sure that you have an estate plan in place. At a minimum, you need a life insurance policy with enough cover to support your family until your children are adults and a will, which designates what you want to happen with your assets and who will be guardians for your minor children. An attorney can help you with more extensive preparation of a plan appropriate for your situation.
