Raising a young family is both wildly beautiful and really tough: the delightful chaos of early mornings, the scent of baby lotion mixed with fresh-brewed coffee, the hum of bedtime lullabies, and the incessant juggle of playdates, promotions, and mortgage decisions. Amidst the laughter and love, each day unfurls with countless demands \u2014 from nurturing ambitions to fostering a secure future for your little ones.<\/p>\n\n\n\n
While it\u2019s undoubtedly tough to manage all of this at once, young families have the benefit of time on their side when securing a sound financial future. You\u2019ve got time to build your nest egg, nurture investments, and prepare for the future. But, you\u2019ve got to create a strong foundation early on, especially when you have a family depending on you.<\/p>\n\n\n\n
At URS Advisory, we have a passion for planning and helping young families realize financial goals. Here, we\u2019ll discuss some of the financial foundations we recommend developing as a young family to be able to worry less and do more with that young family you love.<\/p>\n\n\n\n
Young parents may not think far enough into the future to believe early estate planning is necessary. However, estate planning early on ensures your children have a plan in place if something should happen to you as parents.<\/p>\n\n\n\n
Your last will and testament should include your beneficiaries and the hierarchy of guardians for your children in the event you no longer care for them. Also, you should draft your incapacity documents which include:<\/p>\n\n\n\n
Understanding your spending improves saving efforts and helps you have money in the future for things like:<\/p>\n\n\n\n
Budgeting software like <\/a>Mint.com<\/a> categorizes monthly expenses providing awareness to the flow of money in and out of your household. This helps you manage the realities of your financial situation by:<\/p>\n\n\n\n With a budget in place and budgeting software to support you, you can plan finances for one month to thirty years in the future.<\/p>\n\n\n\n In a small family, children depend on their parents for financial security. We recommend that each parent consider investing in a 20-to-30-year term life insurance policy and base your benefit amount on your gross income. We believe the policy should be 10 to 15 times the gross family income. If something happens, this cushion provides 10 to 15 years of your income to your family, where they don\u2019t have to worry about how they will make it in the future.<\/p>\n\n\n\n In addition to income replacement, a life insurance policy can be designed to cover things like:<\/p>\n\n\n\n Remember, life insurance is typically cheaper and easier to qualify for when you\u2019re young and healthy. Taking out a long policy as a young family is often cheaper than applying for life insurance later in life.<\/p>\n\n\n\n Pro Tip: You can even use a life insurance policy to fund a special needs trust. Read more about it <\/em>here.<\/em><\/a><\/p>\n\n\n\n It’s a sobering reality: the steady paycheck that once fueled your family’s dreams and aspirations will eventually cease. Yet, the need for financial stability, perhaps even more crucial in the golden years, persists. As medical bills, unexpected expenses, and desires for more comfortable and possibly even luxurious experiences emerge, the absence of a regular income can become a pressing concern.<\/p>\n\n\n\n However, this future doesn\u2019t have to be uncertain or unsettling. The power to secure a comfortable retirement<\/a> lies in the actions you take today. By proactively investing in your retirement<\/a> during your younger years, you’re not just saving money; you’re investing in peace of mind, freedom, and the continued ability to support and cherish the ones you love. Think of it as planting a sapling now that will grow into a robust tree, providing shade and respite during the warm afternoons of your later years.<\/p>\n\n\n\n Employer-sponsored retirement plans like 401K and 403B are a good place to start. Invest up to the annual limit and investigate other company benefits like disability and life insurance. This life insurance should be used along with a standalone plan. Don\u2019t depend on employee-offered life insurance alone; typically, it isn\u2019t portable if you switch jobs.<\/p>\n\n\n\n Contributing to a Roth IRA allows you to save above and beyond employer-sponsored plans. Even a non-working spouse can make contributions to a Roth IRA. A Roth IRA is a tax-advantaged retirement account for individuals. You can make qualified withdrawals from the account penalty-free and tax-free if you are 59 and a half years old and have had the account for over five years.<\/p>\n\n\n\n Roth IRAs may be preferable to other retirement plans because they tax the seed at a known tax rate (contributions) rather than at the harvest when the tax rate is unknown (at distribution).<\/p>\n\n\n\n With a strong financial foundation in place, you can then start allocating toward some more exciting goals.<\/p>\n\n\n\n<\/a> <\/strong><\/h2>\n\n\n\n
<\/a>Invest in Life Insurance Coverage<\/strong><\/h2>\n\n\n\n
<\/a> <\/strong><\/h2>\n\n\n\n
<\/a>Invest in Your Retirement<\/strong><\/h2>\n\n\n\n
<\/a> <\/strong><\/h2>\n\n\n\n
<\/a>Consider Contributing to a Roth IRA<\/strong><\/h2>\n\n\n\n
<\/a> <\/strong><\/h2>\n\n\n\n
<\/a>Work With a Financial Advisor<\/strong><\/h2>\n\n\n\n