Life Insurance

Money moves for growing families

Nadine Argueza · Feb 6, 2020
family in the kitchen
New year, new goals? January is over, and it’s said that 80 percent of us will fail to continue chipping away at our resolutions by February (yikes!). While we aren’t personal trainers, we can give personal finance tips. Whatever your list of goals is, hacking your money mindset is a great way to set you and your family up for success. Here’s how to get started:

Make saving a game

Accountability is one of the biggest challenges in maintaining good money habits. As you enter the new year, get your family together to outline a fun and engaging spending plan. First, state that you’re “all in this together” rather than imposing limits on individual habits. Make an end goal to keep each other motivated throughout the year. Ideally, it should be an end-goal or reward that everyone can enjoy together, like a year-end vacation.

Help your little ones understand the value of money by using allowances as an educational tool. With each lump sum, create interactive ways for your kids to funnel their wealth into specific channels. These can be a savings account, spending cash, investments, and even charitable donations.

Teach teenagers the value of money by gifting prepaid credit cards instead of gift cards. Help them avoid impulse buys via weekly check-ins. By encouraging a healthy money mindset early on, young adults will be better prepared for their financial futures, whether they can “see” money coming and going or not. It’s easy for adults to get in on the fun too. As a couple, you can contribute towards a monthly “fun fund” where the person who has saved the most is given spending rights. This is a great way to boost spending transparency and accountability as a household.

Go digital

If you’re overwhelmed by the thought of spreadsheets and financial equations, you’re not alone. Skip the pen and paper with free budget spreadsheets from companies like Tiller. Budgeting software and apps such as Quicken, Mint and You Need a Budget (YNAB) can also get you on the right track.

Automate good habits to boost your personal accountability. Schedule withdrawals to funnel your paycheck to savings, investment, and retirement accounts each month. Set up automatic reminders when bills are due to help you pace your spend. By taking these alerts out of your hands, you will be less stressed and in a better place to adapt when the unexpected happens.

A good place to start for budgeting is the 50-20-30 rule. The first fifty percent should go to basic necessities, such as housing, food, healthcare, and transportation. Twenty percent of your funds should go to paying down debt, retirement savings, and other long-term financial goals. The remaining thirty percent should go to your wants - from impulse buys to vacations.

Go to the experts

You may find that making finances a game and using digital tools isn’t enough. If so, it may be time to go to an accredited financial advisor to get your ducks in a row. Since different advisors have different styles, make sure that you do your research before setting up a consultation. Personal finance blogs are a great way to research common finance terms you may not know about. And remember - you need “every box checked” such as a set income level or have met a significant milestone to begin saving and investing in your future.

Here are some questions to keep in mind: Are you prepared for the emotional ups and downs of the stock market, or will you need to tap into your nest egg sooner? Are you familiar with common financial terms, or do you need a primer on the basics? No matter where you stand, it’s advised to shop around and even ask for the opinions of friends, family, and coworkers if you desire a more personalized approach.

Prepare for rainy days

While life insurance may not register as a wealth management tool, a low-cost term life policy can serve as an income replacement vehicle or even supplement caregiving responsibilities you may have for parents or extended family. Rather than a luxury, life insurance is actually less than what you’d typically spend to eat a meal out and can provide a much-needed layer of security for both expected and unexpected end-of-life expenses.

You may think that your employer-based plan is sufficient, but have you given thought to what will be left behind for your loved ones on top of your final expenses? From rent to education and childcare, necessities can quickly become unmanageable in the event your household loses a breadwinner.

Luckily, locking in a good rate while you’re young and healthy is easy. Term life is particularly attractive to lock in as it’s 20 times more affordable than whole life, and premiums typically go up by between 8 and 12% each year as you age. In addition to a death benefit, life insurance can help your family members pay off debt and keep your company afloat while they learn to get along without you.

Savor the journey

It may sound cliche, but putting your finances in order ensures your family’s success and wellbeing, no matter where the road takes you. The main rule of thumb is to throw out the typical New Year’s approach to goal-setting in place of tools with a more inward focus. Financial rewards start at the center. And if family relationships aren’t healthy, neither will finances be!

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