Strollers and diapers are the priority now. Raising a child is such a great feat in itself that you don’t quite consider the financial implications that’ll come down the line. But, if you start saving now, you won’t stress about it and break the bank later. Avoid these five common money mistakes parents make. Your family will thank you for it.
1. Not saving for college
College isn’t getting any cheaper, and you’re not doing yourself any favors by putting off saving. Despite scholarships and financial aid, plans change and the unexpected happens. Florida offers Florida Prepaid, a college fund that lets families lock in college plan prices and prepay, every month, the future cost of college tuition, tuition differential fees and more! It can seem as little as $5 now but can later cover your 18 year old’s dorm costs. Years from now, you’ll feel relieved knowing you were prepared.
2. Living without a safety net
Once your child works their first job, have them divvy up a small percentage of the paychecks to savings and the rest to checking. If they don’t touch their savings, they’ll have something saved up for a rainy day. The same applies to parents. If you or your spouse loses their job, do you have something to cover your bills in the meantime? Open a savings account for those temporary emergencies.
3. Ignoring retirement
Your child grew up. You saved for their education, and the nest is empty. Time for parents to take that cruise around the Caribbean or road trip through Europe. Make it a reality. Allocate funds from each paycheck toward your senior years. A common option is opening a 401(k) account since jobs can match your contribution. Consult a financial adviser at your bank. If all else fails and you don’t feel like you can make the correct financial decisions on your own, ask for professional help.
4. Not teaching your children about money
School curriculum tends to overlook teaching basic financial habits. It’s left in the parent’s hands to teach their children about the real world. Encourage your child to balance a checkbook once they get their first debit card. It’ll make them more mindful of their spending, rather than having to face an uncomfortable checkout moment when their card declines.
Teach your child the basics like writing a check or budgeting. Establishing a monthly budget can show your children how to save and achieve financial goals. Budgets can feel restrictive, but it helps avoid debt. Credit cards should be used only in emergencies or your child might rack up an endless cycle of debt. Stick to one credit card, which means not being swayed by retail employees who convince you to open a credit account for half off your purchase.
5. Not investing in life insurance
With both parents having life insurance policies, your family will be financially sound if anything were to ever happen. It’s difficult dealing with loss, especially having to pick up the pieces and resume life as normal. Now imagine one parent having to make up for the loss of money to buy their children groceries or save for college.
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