Getting married and starting a family is life-changing. While you’re likely incredibly excited about welcoming children into the world, try not to get ahead of yourself! It’s important that you and your partner are on sound financial footing before embarking on the financial—and emotional—roller coaster that is parenting. If you’re about to get married, and you’re thinking about starting a family, familiarize yourself with the following financial planning tips to ensure you’re prepared, presented by The Licata Group Real Estate.
Make a Will and Declare a Guardian
Writing wills is never fun. No one wants to think about what will happen to their kids in the event of their untimely death. Although these tragic events are rare, they do occur, so it’s always best to plan for the worst. As The Bump explains, drafting a will ensures that your wishes will be carried out regarding how your children are cared for, as well as who will be caring for them, if something should happen to you. Besides dividing up your property among your beneficiaries, your will can be used to declare a guardian for your children. You may also want to include a healthcare proxy and power of attorney to ensure your financial and medical wishes are carried out if an accident or illness prevents you from making these decisions yourself.
Purchase Life Insurance
While you may have been fine without life insurance when you were single and childless, getting married and starting a family changes everything. Now, you have people who depend on you financially. If you should pass away unexpectedly, would your spouse and children be able to maintain their lifestyle without your income? For most young families, the answer is no. This is why every parent—even stay-at-home moms—should consider life insurance!
You also have to think about your funeral and burial expenses. No family should have to navigate tough financial decisions during a period of intense grief, so make a plan to cover your final expenses while you have the chance. One solution is to purchase a pre-paid funeral. Not all pre-paid funeral plans make financial sense, so take the time to understand what these arrangements will cover and whether this really is the best option for you and your family.
Create an Emergency Savings Fund
Life insurance isn’t the only financial safety net you should have in place. An emergency savings fund can protect your family from taking on debt to cover sudden, unexpected expenses like major home repairs, car breakdowns, medical emergencies, or periods of unemployment. If both you and your spouse hold steady jobs, start by saving three months of living expenses in your emergency fund. If only one spouse works or you’re self-employed, it’s a good idea to put away more.
Remember to Plan for Your Retirement
It’s easy to postpone retirement planning when you have so many other things to save for, like your children’s post-secondary education, but NBC News Better stresses the importance of prioritizing your retirement savings over that of your children’s education. Your kids will have access to several funding opportunities when it comes time for college, including scholarships, student loans, and grants. You, on the other hand, will have to make do with the money you’ve saved up for retirement.
Develop a Household Budget
Budgeting is the best way to ensure you can afford the additional costs of raising children while at the same time meeting your family savings goals. Make sure you and your spouse are on the same page when it comes to spending. Plan your budget together, differentiating between things your household really needs and things you would like to have. At the same time, remember to set some money aside for fun activities like date nights or going out with friends.
Of course, your household budget can change a little when you decide to purchase a home. There are a lot of things you’ll need to take into consideration when you buy a house, from saving up for the down payment and securing a home loan. There are also things you may not have considered, such as reducing the interest rate on your loan by paying points on the mortgage. The Licata Group Real Estate can help you throughout the process, so get in touch with one of our agents whenever you’re ready.
Discussing your financial plans is a chance to build a stronger bond with your new spouse. While talking about money may not be the most romantic activity, it can be fun making goals and dreaming about your future together. Getting your finances organized now will set your family up for a lifetime of stability and stress-free living!
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