As a young parent just starting off on this journey, I’ve come to realize that not all who wander are lost. Some are just parents, in Target, hiding from their children.

Raising kids is a tough task! Sleepless nights, random tantrums, encouraging them to walk, teaching them to talk, and then wishing they would sit still quietly is certainly not easy. I’m in the thick of it right now with a toddler and another on the way, and I wanted to share seven financial tips for you other young parents out there!

  1. Create an emergency savings
    • Just like on a plane, you need to secure your oxygen mask first. You need to be able to breathe and think clearly before you help your kids. If you don’t have an emergency cash reserve of at least 3 months of expenses you shouldn’t be worrying about education planning, or any other questions I often get from young parents.
    • Do whatever you have to do to build and keep this reserve at all times. This is your financial foundation, and what little sleep you’ll get will be much better knowing you have cash reserves set aside.
  1. Review your health insurance
    • Do you know what your deductibles are? What out of pocket expenses are you going to have to cover for the birth? Does your preferred pediatrician accept your current plan, or is it time for a change?
    • Health insurance is often overlooked, but a simple change can sometimes save you thousands.
  1. Have an adequate life insurance
    • Get a cheap term policy at a minimum. Younger couples can usually be insured for less than the cost of going to a restaurant per month.
    • Minimum coverage varies from couple to couple, but if you want a general rule of thumb typically 10-15 times annual income would meet the average person’s needs.
  1. Create a basic estate plan
    • Don’t make the mistake of thinking that setting up a Trust, Will, etc is only for older wealthy people. Think of estate planning as making sure your loved ones are taken care of, and your wishes are carried out in the event of your passing.
    • There are crucial provisions that a basic estate plan covers like guardianship for minors in the event of your passing that need to be setup.
  1. Understand your budget
    • Once you’ve made sure your ducks are in a row and your house is built on rock instead of sand, you need to understand your current budget to build your future.
    • Use a budgeting app that syncs to your bank account and categorizes expenses for you. That way you can more readily juggle expenses as baby needs come up. I’m not even suggesting a change is necessary, you just need to know what parts of your budget are flexible.
  1. Prioritize your financial goals
    • Whatever your goals are, you need to put them in order of priority and then fund accordingly. Maybe you prioritize buying a home over college savings? Should you pay off all debts first? Or maybe maxing out your own 401(k)/IRA is most important?
    • If you’re unsure what to do for step six then I highly recommend a full financial plan session with one of our advisors.
  1. Automate your plan
    • By this step you’ve setup a strong foundation, know where you are, know where you want to go, and just need to stick to the plan you put in place. The absolute best way to go about that is to automate everything.
    • If the second your paycheck hits your bank account all the money gets allocated appropriately to your various needs and goals, you’ll be a lot more successful…not to mention one less thing to worry about with the little one around!