How To Create The Best Family Budget In Your 30s And 40s
If you didn't assess your finances and plan for your future in your 20s
, it's never too late to start! While many young couples beginning a family in their 20s create a household budget and rough plan for the future, the 30s and beyond is the perfect opportunity to make strategic financial choices as you settle into your career and raise children.
Check Your Progress
Even if you drew up a basic financial plan in your 20s, it's time to reevaluate. You may have changed jobs several times in the past decade, and you may be making significantly more or less money than you were several years ago.
If you recently started a family, it's also important to factor in new expenses for raising children, buying a home, and saving for college education. If you are in your 40s and your children have grown older, these expenses may have increased or differed to take into account children's activities, family vacations, and the like.
In your 30s and 40s, it's important to regularly evaluate your financial progress toward achieving your long-term goals. You may need to adjust your family budget to stay within your means and figure out clever ways to stretch your income to pay for unexpected household expenses.
Create a Savings Strategy
Your 30s and 40s present the perfect opportunity to save for the future for expenses like your children's college education and your retirement. By starting early, you can set up a solid college fund for your kids that will grow over time to give you a respectable return on your investment.
When it comes to retirement, your 30s is the ideal time to contribute to an established 401(k) through your employer or an outside retirement plan, if necessary. Financial experts often recommend setting aside 10% of your income for retirement on average. However, this will fluctuate over time depending upon your household's financial health; sometimes you may contribute less than 10%, while other times you may contribute more.
If you change jobs at any point in time, request to either keep your retirement funds in your employer plan or roll them into a retirement plan with a new employer. At the very least, avoid taking possession of your retirement funds yourself, which could undermine your investment efforts thus far.
Consider the Future
A significant part of creating a reliable family budget is to prepare for the future in the event of the unexpected. The earlier that you consider protective coverage like life insurance, the cheaper that your policy will be. If you lock in a life insurance policy in your 30s, you can continue to pay an affordable premium over the next few decades to provide your family with peace of mind if the worst were to happen.
As your children grow older and prepare to leave the house, you can assess your life insurance needs and change your policy accordingly. Many families choose to keep term life insurance while their children are in the house and then reduce their policy once their kids are college-age.
by: Leslie R. Wright
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