Finances

5 Steps Parents Can Take to Improve Their Family’s Financial Health

5 steps

Raising a family is expensive. If you have kids or are expecting your first, that’s not news to you. Some days it feels impossible to afford the bare necessities of food, clothing and a roof over your head. However, as a parent, you also need to think about your family’s overall financial health.  

If you haven’t given serious thought to financial planning, now is the time to start. The sooner you get a handle on your finances and start saving for the future, the more financially secure your family will be. Here’s where to start.

1. Assess Your Income

Does your current income allow you to live comfortably and achieve your financial goals? If not, increasing your income should be at the center of your financial plan. While you can always cut expenses to save money, a higher income is the best long-term solution to financial security. Start thinking about ways you can earn a raise, find a higher-paying position, or pivot your career to increase your income.

2. Examine Your Debt

Most families have some debt (about 80 percent, according to USA Today). That’s not necessarily a bad thing, but if your debt is preventing you from achieving other financial goals, you’re using credit cards to spend money you don’t have, or you’re struggling to make headway due to high interest rates, you need to take action about your debt.  

List all your debts including outstanding balances, interest rates and minimum monthly payments. Putting it all out in front of you allows you to assess the state of your debt and devise a repayment plan that lets you get ahead. If you find it difficult to keep track of all your accounts, consider debt consolidation. Consolidation combines unsecured debts like student loans, credit cards, and medical bills into a single monthly payment so they’re easier to manage. However, debt consolidation isn’t guaranteed to work in your favor. It’s important to understand the process and how it will affect your debt before choosing to consolidate.

3. Create an Emergency Fund

Everyone needs an emergency fund, but it’s particularly important for parents. An emergency fund enables you to cover minor emergencies without fretting over the bill and remain stable if your job situation changes. Calculate how much money you’d need to cover three months of expenses and set aside funds each paycheck until your emergency fund reaches that number. If you’re a single-income household, aim for six months instead of three.

4. Budget for Childcare

According to Care.com, one in three families spend 20 percent or more of their income on child care. This makes childcare one of the biggest household expenses that parents face and affording it requires careful budgeting. Even when one parent stays home to care for children, there’s a loss of income to account for. Examine your budget to find areas where you can cut expenses and consider flexing your work schedule to reduce the amount of paid childcare needed. Parents can also save money by signing up for a Flexible Spending Account or using the child-care tax credit.

5. Prepare for the Unknown

Life throws a lot of curveballs. When you’re a parent, it’s up to you to be ready for them. Life insurance and a will are two things every parent needs to protect their family from the unexpected.  

Life insurance pays out a death benefit if the policyholder passes away. With a life insurance policy, your family has money to pay for a funeral and stay afloat following a loss of income. However, life insurance alone isn’t enough. You also need a will that names guardians to care for your children if you pass away. Writing a will is complicated, so it’s best to consult with a lawyer.

Author of this article, Tilda Moore, researches and writes about educational resources for openeducators.org. She is passionate about helping parents and teachers in providing kids with the best education possible. She works directly with teachers and other public education groups to ensure they are working toward our vision of constructing a reliable database of verified information

 

Supplementing Your Income When Going Through A Divorce

The average cost of a divorce in the US is $20,000, and that’s if it goes smoothly in arbitration. For couples who need to battle it out in the court room, a two-day trial alone can stretch into the region of $25,000 before any settlement figures are reached. There’s no denying that divorce is an expensive business, and many ex-spouses struggle to stay afloat financially. If this sounds familiar, you might benefit from making a passive income – earning an additional stream of money without trading too much of your time. Consider the following ways to give your cash flow a boost during this difficult stage in life.

Renting Your Space

Space is a hot commodity, and the digital age makes it easier than ever to match up people needing extra additional room with those who are looking to make some money. Take a look at your property and assess if there are any money-making opportunities to be had. Do you have a garage that you could offer as a storage space? Or a parking space that you don’t use all the time? If you’re happy to welcome guests into your home, then you might even consider letting out a spare bedroom either on a semi-permanent basis or in an AirBnB-style arrangement.

Crowdfunding Real Estate

Another way to make money from real estate requires a small upfront investment. Starting with as little as $500, you can crowd-invest in a specific property and watch your pot grow so long as the market is looking strong. It’s a fantastic way to gain knowledge of the industry without requiring too much risk. With the right investment, you should be able to enjoy consistent  returns, without the responsibility of being a direct property owner.

Use Your Phone

With increasing numbers of consumers becoming attached to their smartphones, perhaps it’s time for your favorite device to get to work for you during your divorce. Some companies will pay you to display an ad on your smartphone lock screen – all you have to do is download an app. It’s also possible to make money by calling up companies as a mystery shopper, asking basic questions that customers need to know and then recording your experience of the call to be used by marketing departments.

Blogging

If you have access to a computer, and you love to write, then this is a great way to generate an additional income stream. If you have a hobby, skill or just a subject that you feel passionate about, then set up a blog and become an expert on the topic. Blog about everything to do with it, providing informative content which offers value to the reader and shout out about it on social media to gain a band of loyal followers.

Once you’re hitting some decent traffic figures, you’ll be able to make money from advertising and affiliate revenue. This option does require a little more effort than some passive income ideas, but once you’ve carried out some initial groundwork, you should be able to sit back and make money in your sleep.

These are just a few ways to generate additional funds, and of course there’s nothing to stop you having several streams of income running at once. The important thing to remember is that there are plenty of opportunities out there, and that will continue to be the case long after your divorce is settled.

Author of this article, Lucy Wyndham, is a freelance writer and former Financial Advisor. After a decade in industry, she took a step backward to spend more time with her family and to follow her love of writing.  

Can A Reverse Mortgage Benefit A Divorce Settlement?

photo-1515180711443-f8685c6d6a74Divorce shouldn’t mean your life is over, but rather a new beginning to living life according to your rules. “Grey divorce” is becoming quite common as nearly one in ten marriages ends after being together for more than 40 years, according to Pew Research. As for the causes, this has been happening for various reasons – one of which is due to retirement. Elderly couples are looking to make their golden years enjoyable, even if life was either too busy or stressful in the past. So, can a reverse mortgage benefit a divorce settlement?

Dividing the Assets

Seniors often have many assets that are shared and nearly impossible to split. During negotiations, a family home is often one of the most sought-after assets as they are usually paid off and hold a lot of equity. That is why divorcees over the age of 63 are looking to compromise on a divorce settlement and help settle their assets with the help of a reverse mortgage. One of the benefits of a reverse mortgage is how it allows one partner to continue living in the home without paying for a mortgage nor have access to equity funds.

Splitting the Benefits of Homeownership

During the divorce settlement, splitting the home asset is usually the first decision to make. Instead of selling the home entirely, spouses could choose who can stay in the home and keep the reverse mortgage while the other party receives the equity funds. This useful tool helps couples reach an agreement without further complications. However, it is important to understand that the spouse who continues to stay in the home will be held responsible for certain obligations such as homeowners insurance and property taxes.

Provide Less Drastic Financial Changes

Perhaps the couple is used to living off two solid incomes – whether it be from owning a business, social security, or pensions from their retirement. After a divorce, both parties will be forced to adjust to the sudden drop in income. In some cases, getting the home in the settlement can be a huge benefit. The funds may come in a line of credit, monthly installments, or a lump sum. Additionally, if you plan to sell the home, using a reverse mortgage can help you purchase an entirely new home within your price range. What’s more, you will not have to worry about making the mortgage payments.

Author of this article, Lucy Wyndham, is a freelance writer and former Financial Advisor. After a decade in industry, she took a step backward to spend more time with her family and to follow her love of writing.