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Finances aren’t always top of mind for parents, especially new ones. Unfortunately, many parents tend not to overthink their finances until a significant event occurs that threatens their source of living. From the high costs of childcare to wider issues such as not having the funds for unexpected expenses through to a global recession, there are so many things that can easily affect our finances.
It is vital to ensure that you prepare yourself financially. So, do you wish to create a stable and reliable financial cushion for yourself and your family? Here are some important financial decisions you have to make.
Start planning for life after retirement
The last thing you want to do is wait until you hit your late 50s before you start planning for life after retirement. It is crucial to start putting aside a tiny portion of your salary or regular source of income in preparation for your life after work. The earlier you start, the more time you may have to save up as much as you can. You can also create multiple saving pots to provide different saving streams and take advantage of a pension consolidation solution to combine all the streams into a single source.
Get the right insurance cover
One of the most challenging financial burdens you may have to deal with has to do with your children’s health. If you already have health insurance, find out if your policy allows you to add your child to your insurance plan. This simple move may end up saving you a lot on medical bills. Alternatively, you can also buy a different health insurance cover for them.
You can also try purchasing a life insurance plan to save you from the financial blow of losing a member of your family.
Set up an emergency fund
While it is crucial to think about your future life after retirement, you should also put measures to give you some level of financial security when unexpected hard times hit. One of the best ways to do this is by setting up an emergency fund.
An emergency fund is simply a source of funding you can fall on to help you sail through temporary financial challenges. According to personal finance experts, it is considered wise to save up at least three to six months worth of your living expenses. Remember, these are only to be accessed when you face an unexpected need for funds; they are not for splurging on holidays or because you didn’t budget enough for clothes this month.
The best place to keep your emergency fund is in an easily accessible savings account or any account that allows you to withdraw your funds without triggering a penalty.
Seek out alternative streams of income
Creating different sources of income is usually easier said than done. But that is no excuse not to give it a try. The larger your family gets, the more burdensome it becomes if you only have one income source. If your regular salary isn’t enough to sustain a growing family, consider alternative income streams.
