As parents, you undoubtedly have a lot going on in your lives. From your own finances to family happenings and caring for your children, life can move too fast.
However, according to a recent survey from Bankrate.com, numerous parents are not dedicating enough time toward financial planning. In particular, 37 percent of parents with children under the age of 18 do not have life insurance, results from Bankrate.com's survey revealed. Of the parents who have life insurance, one-third do not have more than $100,000 in coverage protection.
According to USA Today, the $100,000 protection amount is not enough to replace all of the parents' finances - areas such as lost income, paying for college and mortgage payments. Banktrate.com insurance analyst Doug Whiteman said he found the findings unsettling, and that they should serve as a wake-up call for parents.
"These numbers mean that over 20 million households with dependent children either don't have any life insurance or don't have nearly enough," said Whiteman in a Bankrate.com press release.
In an interview with USA Today, Whiteman added, "You really need to sit down and think, what if something happens to me."
Landmark Bank is proud to offer parents the financial planning advice so their families are protected when the unexpected occurs. One of the first steps every parent should take is to start a savings account. Monthly deposits will build up and provide enough relief in the event of a short-term need.
For first-time or still-young parents, this process may seem daunting because there is no set blueprint of what a financial plan involves. Your mind may be set on your immediate needs - bills, mortgage, rent or student loan payments. However, once you welcome children into your family, you should immediately account for those new cash flows. Frank Paré, a financial advisor at PF Wealth Management, told USA Today that parents need to account for new expenses, such as more food and diapers. Cash flows are supreme, according to Paré.
What is financial planning?
As the name implies, financial planning is when you evaluate current and future finances. This process typically requires analyzing variables to help you predict withdrawal plans, cash flows and asset values.
A strong financial plan will also take into account future child expenses, and specifically, college tuition costs. Planning early may reveal ways you can save and invest in different areas.
Two important areas
First time or not, parents should focus on two particular areas when mapping conducting financial planning: life insurance and a will. Wills are important because they ensure your assets are passed to your children. They need to be written and updated, because you can also name a guardian for your children. If there is no will available after you have passed, state child services may be tasked with determining who raises the child or children.
Landmark Bank's financial advisors can help you gather information about all your financial assets and give you an idea of what to include in your will. This is an important area of any financial plan. According to U.S. News & World Report, even the slightest errors, such as poor wording or forgetting to include sums of money, can cause confusion when the will is read.
When it comes to life insurance, CNBC said most recommendations are for you to cover five to 10 times your income. Advisors will help you determine the right amount your family may need.
For more information about smart ways to manage your finances, contact Landmark Bank.
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