Family Finances – 6 Areas of Planning

We’re talking about the six areas of financial planning. Parents are overwhelmed by everything that they face when they have a child – all the financial goals and responsibilities that you have. It’s hard to figure out what’s a priority, and what to do next. Or even how to organize all of the information. That’s where a planner can help you. Our expert, Paula Brancato is a certified financial planner, working for over 15 years with families, new parents, and moms – including single moms.

Paula explains the six areas of financial planning that are important to pay attention to ­– so that you can relax and do your job as a mom. And not have to worry about all of the financial issues that come up.

1. Financial Position

That includes your balance sheet, your income statement and your cash flow. Which means doing a budget.

2. Protection

Protection of everything you have generally will include insurance. That can be homeowners, life insurance, disability coverage to cover your income.

3. Retirement

I’m sure you’re thinking why is she talking about retirement now – I’m completely overwhelmed. Because everything you need to do to have a great retirement you need to do now. You don’t have to save a lot to begin with, but you want to take advantage of the tax advantages. And you want to make sure that you’re not robbing your retirement to take care of some of the immediate things you need.

4. Short Term Goals

College education and home – like possibly buying a home – or home improvements, an auto or whatever you need in the shorter term. That money would not be managed in the same way as your retirement money. But it’s important to understand: This money is earmarked for college; this money is earmarked for buying a home; this money is my long-term retirement.

5. Tax Planning

You may say, “I don’t understand taxes.” If you work with a planner you’ll begin to understand taxes. They’ll be able to walk you through your tax return, work with your accountant, help you optimize the tax benefits that are available to you, and also minimize the taxes that you are paying. This is very important because as you’re saving money, you don’t want your earnings to be taxed away. Also you want to make sure that you’re not overpaying taxes, because that’s money that could be used for your children, education and your home.

6. Estate Planning

The last area of planning is estate planning.  You may not think you have an estate but you do. Even if it’s just your home and your belongings – you want to put together a will. You want to make sure that your IRA and your 401k have proper beneficiaries. Make sure you have a guardian for your children, should anything happen to you. That’s probably the most important thing to do in estate planning. Then have a power of attorney and a medical power of attorney named. This area can get quite complicated. A good planner will help you think through what your goals are – and work with you, and with your attorney – who writes the will, to figure out how to best organize everything.

One of the most important things about a financial plan is seeing everything organized in one place. It becomes clear what the gaps are in your planning and what the trade-offs are. The sooner you start planning the better. If you can plan before you have a child. That’s best. But it’s never too late to start a plan. Start as soon as you can. It’ll be worth every penny. It’s not an expensive process and it will really help you get to your goals – and lessen your anxiety in this overwhelming, but very exciting time.

About Our Expert: Paula Brancato is a financial planner and investment advisor to new parents, growing families, business owners and family offices. Her strategic expertise derives from service as a CEO and CFO, as well as from her work with hundreds of families and businesses she has advised and helped. Paula has worked at several major banking and investment firms and she earned her M.B.A from the Harvard Business School. Reach out to Paula: (646) 813-9590 or pa************@ba******.com