Financial Objectives Every Family Should Pursue

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Parenting is all about setting a good example. However, there are other factors in play. One is your ability to make smart financial decisions.

With this in mind, let’s take a look at several financial objectives every mom and dad should pursue heading into 2022:

Start an Emergency Fund to Protect Against Job Loss

It’s important to save money to protect your family against job loss because most unemployment insurance programs don’t offer enough money to cover your basic expenses. As a result, it’s a good idea to start an emergency fund for your family if you haven’t done so already.

A smart way to start your emergency fund is to use your bank’s automatic savings feature to automatically put aside at least 2-3% of every paycheck into a separate bank account. Most financial experts recommend continuing doing this until you have enough money to cover your basic expenses for 6-9 months. This makes sense because it usually takes people about 6-9 months to find a new job.

Get Life Insurance

You might think that buying life insurance is a waste of money at your age. However, purchasing life insurance makes sense financially for most parents because it protects your family’s long-term financial security when a parent dies sooner than expected. Now is the time to buy life insurance because the average life insurance cost for healthy individuals in their 30s is cheaper than for older individuals.

You might be wondering how to decide how much life insurance to buy. Here are a few questions to consider that can help you determine how much life insurance to purchase:

  • Do I need to protect my home against income loss?
  • Will I need help paying for my children’s education?
  • Will I need help paying for my spouse’s final expenses?
  • Will we need long-term disability coverage for each other?
  • How much coverage do we need to buy if we are healthy?
  • How does our age play a role in how much life insurance to buy?
  • Is it better to purchase a policy separately or as a couple?

A reputable insurance agent can help you answer these questions and use the answers to find life insurance policies that suit your needs.

Pay Off Your Credit Card Debt

Like most people, you probably have credit cards that charge high-interest rates. It’s imperative to work on a plan to pay off your credit cards these days because today’s inflationary environment will probably force credit card companies to raise their interest rates.

Here are a few suggestions that you can use to develop a plan to pay off your family’s credit card debt:

  • Set aside up to 10% of your household’s monthly income. Use that money to pay off your credit cards each month.
  • Try to pay at least twice your minimum payment each month.
  • Stop using your credit cards to pay for items. Use your debit card instead.
  • Use cash to pay for smaller purchases.
  • Keep an accurate list of due dates for payments to prevent missing a payment.

Pay Off Your Student Loans

Most parents today have student loans that are a burden on family finances. Developing a plan to pay them off is important because it can free up money for other important needs.

A straightforward way to develop a plan to pay off your student loans is to set aside up to 25% of your monthly income and use it to pay off your student loans. This is the most direct way to quickly pay off your student loans because it’s the fastest way to reduce your principal.

If this isn’t feasible, you might want to consider using one of the federal government’s repayment or refinancing programs available to borrowers. Using these programs can be helpful because they often offer attractive repayment options to help you pay down your student loans faster. However, make sure you read the fine print included in any repayment or refinancing offer to make sure the program is helping your family pay off its student loans.

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