A Financial To-Do List for Young Families

Between juggling our work, commute, marriage, children, extended family and, oh yes, personal time, most of us are beyond busy. But for young families, it’s important to make time to focus on laying a financial foundation you can build on as your family grows. If you’re not already adhering to the 12 tips below, it’s time to get started.

  1. Get a credit freeze for your children. Identity thieves target children. Credit freezes can stop them. They’re also free.
  2. Buy life insurance. Get enough to keep your children safe and your surviving spouse unburdened by financial worries. Take care of other important insurance coverages while you’re at it.
  3. Be a savvy saver. Savings include principal payments on debt related to your education or residence, contributions to retirement or health savings accounts, additions to cash reserves in anticipation of buying a new home, or to establish an emergency fund. Start now.
  4. Begin building a long-term portfolio. Start learning investment basics from a reputable source like The Investment Answer. In the meantime, contribute to your retirement plan and work up to at least achieving the full employer match.
  5. Maximize contributions to an HSA. Health savings accounts have triple tax advantages and can be better than Roth accounts. You are eligible if you are in a high-deductible health insurance plan.
  6. Start a 529 college savings account for each child. The Wisconsin Edvest program has appealing investment options and you can nab a Wisconsin tax deduction of up to $3,200 per beneficiary. Remember: People who start early don’t have to save as much.
  7. Get a basic estate plan. In addition to wills, specify who will take care of things if you’re incapacitated with powers of attorney for healthcare and financial affairs. Consider a revocable trust to specify who you’d prefer to care for your children and their inheritance.
  8. Raise financially competent children. Savvy habits start early. Help your kids recognize trade-offs, have good boundaries, make value-based choices and enjoy the fruits of their labor.
  9. Take your work seriously. Human capital is the wellspring for long-term financial security and personal well-being. Invest in yours by exploring, taking risks, finding mentors and contributing.
  10. Learn to outsource. Pause to consider what you can do and want to do on a daily basis, and use a small percentage of your income to get help for the rest. Use delivery services. Hire someone to do errands. Engage a cleaning service. Consider hiring a babysitter for Saturday mornings to be home base while you go in and out of the house and spend time with various combinations of children. Really.
  11. Keep learning. The ins and outs of financial planning can be confusing, especially if it’s not a topic you enjoy, but you can’t afford to be ignorant about your own affairs. Find a mentor or hire an advisor; then work with them on an annual financial review. Couples can, and should, talk about finances.
  12. With prudent cash-flow management, free cash flow gradually increases as child care costs and debt payments soften. Hang in there!

Is your family ready to create a better financial plan? Get in touch with me at clint.wondra@hoganfinancial.com to find out how Hogan Financial can help.

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