For many of us, having a child is a bit of a wake-up-call that we need to start thinking a little more like adults. Planning for your family’s financial future is one of those dreaded “adult” things that is best addressed sooner than later. Here are a few things to consider.
Get a Financial Advisor
There are a lot of financial questions you are going to face and having someone that you can trust who can help you navigate it all can really help. Ask friends and family about who they trust to handle their financial concerns and set up a meeting. You’re not looking for simply a stockbroker. You want a fiduciary or an independent financial advisor who can put your financial interests above their own. If you’re in the West Michigan area, we love our guy: Andrew O’Neill.
If you don’t have a life insurance policy, now’s the time to get one. We don’t like to think about unexpected deaths, but they happen, and you want your family taken care of financially if something awful does happen. Talk with your financial advisor about a good plan for you. The earlier you start, the cheaper the policy will be. Generally, if you’re being proactive about managing your finances, term life insurance is what you want to go for (as opposed to whole life).
Will or Trust
You might not have a ton of assets right now, but the sooner you get your will or trust in order, the better. As stated above, crazy and unfortunate things happen and the more you can minimize the stress on your family from financial and legal issues, the better. If Mom or Dad just passed away, the last thing anyone wants to think about is fighting over assets in court.
Also, although a trust is more expensive to set up, it has the advantages of being able to address medical power of attorney and a more detailed plan for distributing assets – so you have a little more control over when and how money is handled.
529 College Savings Plan
Although not every family has a goal of helping or paying for their child’s college education, if you do, consider starting a 529 plan. A 529 plan is a savings account that has some tax-advantages to encourage saving for future education expenses. Talk with your financial advisor about getting this set up. Then, add it to your Giftster list and tell your family and friends about it. Perhaps others would like to help contribute to it for holidays and birthdays! (How many toys does a 1-year-old really need?)