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Becoming a parent is a major milestone.
In addition to ensuring your own financial security, youre now responsible for thefinancial securityof someone else.
This requires careful financial planning and the use of strategies you might not have had to tap into before.
Here are some essentialfinancial planning strategies every parent needs to learn.
Both types of coverage are essential if your family relies on your earnings.
Build a Financial Safety Net
Having anemergency fundis always a good idea, but its particularly essential for parents.
Plan for Child Care and Education Costs
Child care and college are two of the biggest expenses parents face.
Fortunately, there are special accounts that can help you plan for both.
Ideally, you should start saving for child care costs in advance.
Unlike retirement, college expenses can be covered through scholarships, loans and grants.
Aim to save 10% to 15% of your pre-tax income for retirement to ensure long-term financial stability.
Its critical to have estate planning documents in place, Lam said.
A will should designate a guardian in the event of your passing.
Invest in Your Childs Financial Future
You might also consider setting up long-term investment accounts for your kids.
As most people know, time is the power behind compound interest, Sexton said.
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