What factors affect parents’ finances?
OWe hear from Matthew Spradlin, Certified Financial Planner at Godfrey & Spradlin Private Wealth of Steward Partners, talk about the New Parent Pyramid he and his team have created for new parents, as well as the different ways new parents and seasoned parents manage their money and think about alternative assets.
Can you give us an overview of the pyramid of new parents?
Our pyramid is a hierarchy of planning topics that we recommend new parents focus their attention on when it comes to securing the future of their new or growing family. It starts with a foundation in estate planning, including executing a basic will and trust, as well as appointing a guardian for their children. The next level of the pyramid focuses on ensuring appropriate and adequate life insurance for both parents, especially if one parent is the primary or sole source of household income. Finally, once these two essentials are in good order, we advise you to focus on short-term and long-term savings strategies, including planning for retirement and when to start considering retirement strategies. saving for college. This is the remaining component.
What were the big trends and issues impacting parents’ finances in 2021?
Parents, like all consumers, have had to deal with significant year-over-year increases in the prices of goods and services. In addition to inflationary trends, the evolution of the pandemic has continued to add frustration and disruption for working parents. Periodic quarantines at daycares and schools have created tremendous pressure for working families, especially those with both working parents and multiple children.
In 2022, what are some of the trends and issues that could impact parents’ finances?
A significant number of women staying out of the workforce has been a lasting negative impact created by the pandemic. Continued quarantines and a lack of reliable childcare options could continue to put pressure on working mothers hoping to return to their previous full-time careers. Additionally, the housing boom across the country has created significant barriers to entry for young parents looking to buy their first home. Competing with all cash transactions and offers significantly above asking price has made it nearly impossible for this new generation to get into home ownership.
How do new parents and seasoned parents think about investing and evaluating alternative assets like cryptocurrencies or real estate?
The approaches of first-time parents and more experienced parents when it comes to cryptocurrencies and real estate can be very different. New parents tend to feel more emboldened to accept the increased risk and volatility associated with cryptos given the potential for greater rewards with the asset class in recent years. The overall percentage of cryptos in a new parent’s wallet also tends to gain greater weight compared to more traditional assets. The same could be said when it comes to real estate with more experienced parents. The significant increase in real estate prices along with the growing number of employers supporting virtual work environments has created mobility like we have never seen. Seasoned parents who have seen the value of their homes appreciate significantly throughout the pandemic have been able to enjoy their newfound equity. Whether buying a second home, starting a new career or business, or even renovating a larger home, the parabolic rise in real estate values has offered unprecedented flexibility to current owners.
How do seasoned parents handle and think about their money differently than first-time parents?
I see this in the context of time. New parents all hear how quickly time flies with the birth of a child and seasoned parents can absolutely attest to this phenomenon. Seasoned parents, usually further along in their careers, are often eager to take advantage of savings programs offered by employers or other individual savings opportunities. Ironically, new parents should take advantage of the one thing more experienced parents can’t: time. The more time an investor has to take advantage of the potential growth of their investments, the greater their chances of success. Even if they are small, whatever you can save in your early years is likely to pay dividends later in life. This axiom is true for all savings goals.
This interview originally appeared in our TradeTalks newsletter. Sign up here for weekly access to exclusive market analysis from a new industry expert. We also highlight TradeTalks’ must-see videos from the past week.
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