What to do now for you and your family.
As parents, most likely you are already managing a sizable to-do list. But along with work, and daily family and household responsibilities, you also will need to tackle essential financial-planning and life-planning tasks — for your and your family.
If you haven’t yet taken the time to line up your financial affairs, do so now. Then communicate your wishes to family members or a financial advisor to save your loved ones from the challenges of hunting down financial information should the need arise. Here are six tips to help you get started.
1. Create or Update Your Will
You can do this through an online program or hire a financial, tax or legal advisor to help. Name an executor — typically a trusted family member, friend or attorney — who will settle the terms of your estate should the unexpected occur. Name a legal guardian for any children under age 18, and designate how you want your assets distributed, including the age at which your child will receive payouts, savings or investments. Make sure the executor and guardian you have chosen, as well as any backups, accept this responsibility.
2. Organize All Important Documents
Gather together your will, marriage and birth certificates, military records, property titles, insurance policies, power of attorney, account information, mortgages, tax returns and any other records of debt or financial responsibility. Tell a family member or trusted friend where you keep these documents, and the location and contents of any safe deposit boxes. Also, provide a list of passwords to your accounts.
3. Create a List of Contacts for Financial Matters
Create a file of names, phone numbers and e-mail addresses for your tax advisor, attorney, insurance agent and anyone else who administers your accounts or investments.
4. Review Your Life Insurance Coverage
Review your policies and find out if your employer’s and supplemental life insurance plans provide enough coverage to meet your family’s needs should the unexpected happen. Take into account all child-related costs, including college. If you don’t have a plan through work or if you need additional coverage, do a bit of research by reading articles, or consult a financial advisor to find the right plan.
5. Save What You Can, When You Can
There are many ways to save. Whether through a liquid account, Certificate of Deposit or a retirement fund, the most important thing is to get started right now. And prioritize saving for emergencies. Aim to save a set amount, even if it’s small, each month. Ideally a family saves enough to cover three to six months’ worth of expenses. Plan to save larger chunks of money — such as your annual tax refund or year-end bonus — when those opportunities arise.
6. Save Early for College
If you haven’t started, start now. If you had started saving $100 a month for college the year your child was born, an account earning six-percent interest a year could have built to $38,200 by your child’s 18th birthday. That compares to just $23,400 if you started five years later. Look into your state’s 529 College-Savings plan or talk to an advisor about other college savings options.
Address these financial milestones now, and revisit periodically as your family changes and grows. You will be weaving a secure safety net that proves its worth with less worry and hardship when life’s unexpected events occur.
For more information and tips on getting your financial affairs in order, visitwww.smartaboutmoney.org.