Many people start to think about their finances differently when children come into the picture. And with recent threats of a recession and economic uncertainty, it’s crucial for young families to begin organizing their estate sooner rather than later. 

It may feel overwhelming, but with the right saving strategies, you can give your child a leg up on college tuition, build a retirement fund, protect against emergencies, and more. Today, the estate planning lawyer from our friends at Katje Law Group explains how to get started.

Saving Priorities

When cash is limited, your allocation of resources becomes all the more important. Parents should think practically about what is most important and whether it’s affordable in the long term, especially regarding these three major finance-related areas:

  • College: for many people, college is a prerequisite for success in adult life. If you are saving for your children’s future college costs, start early by investing your money in low-risk options, such as mutual funds, custodial accounts (under UGMA/UTMA), qualified US savings bonds, and more. However, if you’re trying to finance a degree for yourself or your partner, look for online programs that allow you to pursue your education while working. Your employer may even have tuition assistance or reimbursement for relevant degree programs, like business. 
  • Housing: if you’re looking for more room for your family, purchasing a house can be a great way to build equity while providing that additional space, but you have to be prepared to handle the cost of upkeep and maintenance. If you are in a stable financial situation and your area is in a buyer’s market, then consider investing. However, if a major repair would put you into financial trouble, consider renting a house and saving up money for a down payment when you’re in a better financial position.
  • Retirement: it might seem a ways away, but it’s critical that you begin saving for retirement while you’re still young. Social security benefits rarely provide an adequate replacement for income and there’s no telling what life after work looks like in the future.
  • Emergency Funds: with a volatile climate, economy, and geopolitical landscape, preparing for an emergency may not be just smart but also necessary. You should aim to keep at least a few thousand dollars in cash, stored in a safe location should a disaster strike.

Saving Strategies

As important as where you place your money are the strategies you use to accumulate it. Fortunately, there are plenty of ways you can cut down on expenses and increase your savings.

  • Groceries: savings start in the grocery store. It’s possible to save huge amounts of cash by purchasing wholesale and stockpiling key ingredients (such as canned foods) in bulk. Take some time to develop a recipe list that focuses on batch cooking and items that can be frozen and reused.
  • Subscriptions: if you’re looking to cut costs, it might be worth re-evaluating your subscriptions on anything from phones to entertainment to software to utilities. Many providers would prefer to renegotiate a contract than lose their customer entirely.
  • Apps: in recent years, technology has evolved to accommodate efficient financial management. It’s worth looking into personal finance apps to see how they can help — some, for example, will allow you to allocate a percentage of each purchase toward family savings.

Protecting Your Loved Ones

For young families, another crucial area of financial planning is insurance and warranties. The right policies can protect you against a twist of fate or major costs down the line.

  • Life Insurance: We don’t like thinking about the bad things, but life insurance can protect your family and provide financial security in the event of an untimely accident. Look into acquiring a policy for you and your partner, as it can make a big difference if the worst happens. 
  • Insurance Records: For insurance, it’s important to make and maintain records of valuables and assets. You can highlight them in photos by using a free background eraser online. This will make identification simple and straightforward.
  • Home Warranties: if you’re buying a property, a home warranty can cover breakdowns of home systems and appliances. Before deciding whether to purchase a home warranty, it’s important to ask: is getting a home warranty worth it? To answer this, check the home inspection report for any red flags and see whether there are any existing warranties on appliances.
  • Will: when you have a young family, it is crucial that you have a will in place. Without a document in place, your assets are subject to state law and may not necessarily pass to the people you’d like them to. Make sure you’ve researched how to write a will and make sure your next of kin is made aware of its whereabouts.

Start Planning Now

Financial planning is crucial for all of us, but it is an especially timely matter for young families. Take the time to put in the legwork now, so you have more time to plan. In the end, you’ll find money matters (and paperwork) are a lot more manageable in the years to come.

Katje Law Group is a Boutique law firm that is committed to its clients and their families. Our Orange County attorneys are dedicated advocates that provide virtually unparalleled experience in almost every aspect of Real Estate and Estate Planning matters throughout Southern California. Visit our website to learn more!