As a parent, you absolutely want to be in a good financial position. It can be hard, though, especially with unexpected expenses. From medical emergencies to damage to your home, you have to be prepared for the unexpected. Fortunately, there are several ways you can plan and take action to improve your financial security.
1. Build Up Your Emergency Fund
The first thing to do while you’re focused on financial security is to build up your emergency fund. A basic emergency fund starts at around $1,000 and is designed to cover sudden minor emergencies. With that money in the bank, you won’t have to use a high-interest credit card or take out a loan if you face a sudden bill.
Over time, you can build your emergency fund up to enough to cover job losses or unexpected major expenses, too. For example, if you earn $3,000 a month, over time you could build your emergency fund to $9,000 to $18,000 to cover between three to six months off work due to job loss.
2. Use Tax Breaks Effectively
Parents do get some great tax breaks. For example, you may be able to benefit from the dependent exemption, child tax credit, earned income tax credit, or child and dependent care credit.
If you get money back from your tax return, then adding that money to your emergency fund will help with your financial security. You can also invest it into the stock market, an RESP for your children or RRSP for yourself, or a money market account. If you put the money where it can make some interest or grow in value, you may be surprised by how much you can save over time.
3. Save Money on Home Repairs
The first thing to consider is how you’re taking care of your home. If your home starts to break down, you need to take care of home repairs earlier rather than later.
Think about it this way: if you see that the caulking on your bath is coming loose, you can simply buy a caulking gun and some caulk to make the repair. It’s not particularly expensive. But if you wait, you could find that your subflooring was soaked from water getting behind the tub. Now, you might have to have the whole area ripped up to mitigate mold or water damage. That’s an expensive situation to find yourself in.
As another example, think about your heating or air conditioning. If it’s not working well or keeps cutting out, you can reach out for repairs or service immediately rather than seeing if it begins working normally again.
With that in mind, look around your home regularly for small repairs and maintenance that need to be done so you can save more money and avoid big expenses.
Whenever making home repairs or modifications, keep receipts for any work done. There are some updates that could raise the value of your home which could pay off in the long run.home
Addressing necessary home repairs will help you save money in the long term and could even raise your home’s value.
Work towards Financial Security Today
Building your emergency fund, investing your tax return, and keeping up with home repairs are all great ways to work towards financial security for your family. If this list feels overwhelming, pick one small thing you can do today. For example, can you commit to saving $5 a week instead of buying one coffee? Or can you tackle one small area of your home that needs fixing? Sit down with your spouse and discuss what you can do today to reach your future goals.