How Families Can Reach Their Financial Goals. Young families have a lot to juggle, from caring for young kids or finding ways to save up for a house. By establishing—and sticking to—a solid budget for your spending, you can still afford to enjoy life while building up a nest egg for buying a house one day or saving for your kids’ college tuition.
Budgeting 101
Because we all learn about budgeting in different ways, it’s important to have open and honest conversations about your spending habits with your partner. The earlier you do this, the better, because when you’re on the same page about your finances, you can work as a team to reach your financial goals.
After you’ve combined your finances, determine what goals you have as a couple. Are you planning to have kids in the near future? Or if you already have kids, maybe you’d like to start saving for their college education. For couples who are renting, maybe buying a house is an important financial goal. Be sure to write down your financial goals and determine a savings plan where you can put money away regularly to meet those milestones.
Budgeting should be a daily procedure. Nowadays, there are plenty of apps and software out there that can help you keep track of spending and saving. You can connect your bank accounts to these apps, and transactions can be easily categorized and recorded so you can analyze your spending habits. You may find areas where you can save, which will help you redirect your income to working towards your bigger finance goals.
Financial goals
When your budget is in place, you can start getting into the nitty gritty of working towards your savings goals.
If your most pressing goal is to buy a house, it’s a good idea to learn about how much you should save for a reasonable down payment. It’s best to put as much down as possible; the more you can pay initially will lower your total loan amount and reduce your monthly payments. It’s possible to buy a home without a down payment, but you’ll get a much better interest rate with a down payment. Many lenders will ask for about 5% down, but it really depends on what type of loan you choose.
For couples who are thinking about having kids, it’s a good idea to start saving for babies. Kids can be expensive, between medical bills and various supplies you’ll need—diapers, baby food, and nursing supplies can add up quickly. Think about setting aside money well before you get pregnant in order to cover initial costs.
If you already have kids, you may be considering setting up a college fund. While college may feel far off if you have young kids, you’re making a great choice by putting away money early on. Even as little as $50 a month will help establish a savings account that can grow over time as you earn more. When choosing the best high-interest savings account look for accounts that offer competitive interest rates. Online banks and credit unions often offer higher rates compared to traditional brick-and-mortar banks.
Funeral planning
Even if it seems far in the future, you should start thinking about ways to save and prepare for your funeral. Funerals are expensive—on average upwards of $9,000. If you can plan ahead and start putting money away for funeral costs, you’ll help your loved ones avoid financial burden on top of grieving your passing.
Determine what kind of funeral you would like, and whether you want to be cremated or buried. The costs can vary dramatically, so begin saving for the funeral you’d like. Be sure to communicate what you want to your family—in writing—so your wishes are carried out.
Financial planning for a young family is complex. It may feel like there are almost too many goals to save for, but if you put bite-sized savings away each month, your goals will be met before you know it. Use budgeting apps to help you stay on track, and have open, honest conversations about spending and saving with your partner.
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