Author bio: Ksenia Yudina is the Founder and CEO of UNest, the money app for your kids’ future. Ksenia is an entrepreneur and financial expert with over a decade of experience in the financial industry.
As a wealth manager she helped affluent parents access smarter saving and investment options. She founded UNest to extend the same financial acumen to parents across all income levels and backgrounds. To date, UNest has helped tens of thousands of parents save millions of dollars for their kids’ future.
As a mom of three, and a former financial advisor, I understand firsthand that parents’ number one priority is their children. We often shower our little ones with gifts that they’ll quickly outgrow, but we seldom discuss one of the most crucial topics: how to financially prepare for a baby.
As parents, we want to build a secure financial future for our children, so below are a few of my top investing tips for new or expectant parents.
Build an Emergency Fund
Having an emergency fund is the foundation of your financial health. It gives you freedom, peace of mind, and it protects you from the unexpected.
No one enjoys living paycheck to paycheck and worrying about whether they’ll be able to pay rent or put food on the table should something happen to their income.
With an emergency fund, you can breathe easy and focus on the things that matter, like raising a child.
If you have high-interest credit cards or other debt, pay that down first and stick to building a $1,000 emergency fund.
Once you’ve paid off the debt, then it’s a good idea to have three to six months of your living expenses in a rainy-day fund. Figure out what it will take to reach your goal and work backwards from there.
Open a Children’s Investment & Savings Account
If you’re a parent, saving for your kids is most likely your top priority. Funnel some of your hard-earned dollars toward a UTMA account, which is a tax-advantaged custodial account and gives you the flexibility to pay for things outside of just education.
With a UTMA you can use the money for anything child-related such as a laptop, summer camp, first car or even a wedding.
UNest makes it easier than ever for parents to open an investment and savings account for their children. It’s the go-to money app for busy parents. Anyone with a smartphone can open an account in just five minutes and get started with as little as $25 a month.
In addition, friends and family can easily contribute to a child’s account for birthdays and special occasions. Why not give a gift that will last a lifetime?
Get Life Insurance
Any parent knows that once you have kids it’s imperative to plan for every scenario. Should something happen to you, your debts are not necessarily forgiven and unfortunately, your family could be on the hook.
Making sure you have proper insurance coverage protects the ones you love.
Additionally, while having life insurance provides a safety net when your kids are young, it can also be an integral part of your long-term financial plan.
Focus on Low-Cost Products and Diversification
If this is your first foray into investing, I recommend focusing on low-cost index funds or ETFs. In addition to being cost-effective, they can provide diversified exposure to a basket of stocks, which helps mitigate losses.
It’s also worth noting that you can easily ‘set and forget’ these types of investments so that you can spend your time on the things you enjoy in life such as activities with your family.
If you have extra cash on hand, you could consider investing in individual stocks of companies you love, but never invest more than you can afford to lose.