We know thinking about an investment strategy while you’re in the throes of preparing for the arrival of your newborn is a bore. No one wants to think about estate planning or additional expenses when they’re going through lists of baby names, painting the nursery and making their home child-friendly.
You never know what life might bring, and now that you’re responsible for small human’s well-being, it’s even more important to organise your financial portfolio. Here are 5 smart money moves you can make to increase your financial stability and confidence about your family’s financial future:
Track Your Savings and Expenses
Perform a cash flow analysis to gain a clear understanding of your fixed and variable costs. This helps you identify where you can cut down on impulse purchases and increase your savings. As your child grows so too will your expenses. It’s vital to prioritise savings, especially because by now you’re most likely saving towards multiple goals.
Open a Higher Education Savings Account
This can save your long-term investment strategy and prevent you from digging into your retirement funds. In today’s job market you can’t predict the security of your child’s chosen profession. They might need to do additional studying or decide to pursue a career outside of the usual university or college subjects.
New parent’s don’t necessarily feel the need to save for something two decades away and don’t realise that higher education is one of the largest expenses that comes in consecutive bursts between 3-4 years. If your child is fortunate to receive a scholarship, then you can always transfer the funds to assist another child or reinvest the money in stocks, bonds or purchase real estate and take advantage of rental income.
Get Life Insurance
No one likes to think about the worst-case scenario, but if you want a solid investment strategy, you should take out a life insurance policy as soon as possible. If an unexpected event befalls your family, you need to ensure that your family is provided for. Whether you choose a single or joint policy will depend on your affordability, the level of cover you and your partner need, as well as your particular work benefits and health.
Plan Your Estate
You might think your investment strategy is sorted, but if you don’t plan your estate, then there’s no guarantee your investments will be managed properly after your death. While you’re inheritance planning, you also need to nominate guardians to care for your child if you and your partner pass away.
Opting for a living trust lets you control the timing of the distribution of your assets. Some parents don’t like the idea of bequeathing all their money to their child when they’re 18 incase the spend it recklessly. They prefer to transfer one-third at the age of 25, one-third at age 30 and one-third at age 35 to safeguard their child’s financial stability.
Don’t Neglect Your Retirement
It’s natural as a parent to put your child first and focus your finances on ensuring they get the best you can offer them. Along with that, you should strive to be a positive financial role model for your child, and this entails focussing on your long-term financial needs.
An investment strategy should cater for all the stages of your life. If you’re diligent with your money, you won’t find yourself in the unfortunate position where you become a financial burden to your children during retirement. Your golden years should be about spending quality time with your family, not stressing about making ends meet.
Re-prioritising your finances to help raise a well-rounded child is not an easy undertaking, but with effective planning - especially when it comes to managing your savings and expenses - you will be able to give your child everything they need to prosper in the world. You can download our New Parents’ Guide to Finance for further investment tips. If you’d like to expand your strategy and include real estate in your financial portfolio, then we can help. Our property for sale in Costa Blanca is ideal for family holiday homes, buy-to-let rentals and retirement residences.