CUMMING, GA – Becoming a new parent carries with it a new set of costs and a ton of what-ifs to consider. Well-loved financial advisor in Cumming, GA, Financial Consultants Group compiled a list of practical financial tips for new parents in Forsyth County.
Revise Your Monthly Budget
Your new budget plan should match your new lifestyle because you're not just facing the higher immediate costs such as medical bills, clothes for your baby, nursery furniture, and other baby gear. Now that you have a child, add more ongoing fixed costs to your existing budget. These costs are diapers, baby formula, bottles, and wipes, to name a few.
To get started on coming up with a new budget plan, make a list of all your current incoming and outgoing money. For the incoming column, list all your recurring fixed costs, such as rent or mortgage, insurance, taxes, phone and utility bills, groceries, and so on.
Don't forget to include costs that come up once or twice a year, such as a car maintenance or holiday expenses. Once you have the figures, look at each item and consider which to cut back on to divert the extra cash into a savings fund.
Ideally, you should have already paid off existing debt such as credit cards, car loans, or student loans. If you haven't, it's best to start paying these down aggressively so you can still have a little wiggle room in your budget.
You might encounter problems along the way while sticking to the new budget. The key is not to give up. Instead, keep adjusting until you end up with a budget plan that works for your family and will allow you to be consistent with it.
Double Down on Your Emergency Fund
Financial consultants recommend saving the equivalent of 6 months of household costs in an easy-to-access savings account. These funds will help keep your household running smoothly in case of large, unexpected expenses that could arise due to the loss of a job or other financial emergencies, such as one or both parents getting ill.
If you don't have an emergency fund, saving an amount equivalent to your one-month expenses is a good start. Then once you get the ball rolling, increase your emergency savings to 3 months, then eventually six months. If you can keep going beyond that, all the better.
Start Saving for College
It isn't easy to know exactly how much college will cost and how much you need to save. The most important thing though is for parents to start as soon as possible, so their money has more time to grow and take advantage of the power of compounding interest.
The state-sponsored 529 College Savings Plan is a good starting point for new parents. It's a tax-advantaged investment account quite like the 401(k), except it's for education instead of retirement.
Once the child is ready for college, they can withdraw from the savings plan tax-free. The contributions and investment earnings over the years can be used for qualified expenses like college tuition, books, accommodation, and other miscellaneous fees.
Financial planners recommend that parents start by depositing $1000 upfront, if possible, and then contribute $100 to $200 each month afterward.
Prioritize Your Retirement Savings
Putting money into your child's college savings is essential. That said, your retirement savings must not take a backseat. In an ideal world, new parents can save for their retirement and their child's college education simultaneously, but that can be difficult.
If you must choose, you should prioritize saving for your retirement because college, though it can be expensive, has many available financial aid options that your child can apply for. The same can't be said for retirement.
Over time, if you get more available cash through a raise that comes with career investment or other investment opportunities paying off, you can start saving for your child's education.
Final Tips
Other things you need to consider as a new parent are updating your estate planning documents and insurance and taking advantage of tax breaks. The former allows you to make sure that your money and other assets go to your child in case of the sudden unexpected death of one or both parents. The latter helps cover out-of-pocket medical costs like copayments, deductibles, and medicines.
Finally, consider working with an investment management service provider to fortify your financial plan for your growing family. They will create a robust financial plan diligently customized to your unique situation, giving you peace of mind for the present and future.
About Financial Consultants Group
Founded in 1996 and located 6 minutes from Cumming Fairgrounds, Financial Consultants Group is an independent full-service financial planning and investment management firm known for making clients understand their unique financial situation to plan better for the future.
The financial planning company is composed of experienced, trained, and certified experts to help clients overcome family crises by developing customized plans to help them make informed decisions about all things that may affect their financial present and future.
Proudly serving Forsyth County, Financial Consultants Group is located at 1080 Sanders Rd Suite 300, Cumming, GA 30041, United States.
