Father’s Day might be over, but now is still a meaningful time to reflect on one of the most enduring gifts a father can provide his family: financial security and the foundation it creates to support generational wealth transfer. Whether you’re just starting out on your journey as a dad or working to strengthen what you’ve already built, there are practical steps you can take today that can help make a lasting impact.
Step 1: Organize and Allocate Savings
Building a solid financial plan can help you work toward securing your family’s financial future. A popular approach is to think in terms of three savings buckets: immediate, intermediate, and long-term. The first bucket may include setting aside an emergency fund, often suggested to cover three to six months of essential expenses for unexpected events like medical emergencies or work disruptions. The second bucket typically covers shorter-term life goals, such as home purchase, having a child, paying for college expenses, home improvements, vacations, and other planned purchases and milestones. The final bucket focuses on long-term investments aimed at retirement and legacy planning.
Step 2: Start or Reassess Life Insurance Coverage
Life insurance is a crucial safeguard that many fathers may want to consider. It is designed to provide financial protection and support for your family if the unexpected happens, with a death benefit that’s usually tax-free. Life insurance may help your family stay in their home and pay for monthly expenses even if you are no longer around. There are two main types of life insurance: term and permanent. New dads may consider term life insurance as it offers coverage for a specific period and tends to be more affordable. But that insurance ends, while the need for a benefit may continue later through life. Permanent life insurance policies provide lifelong coverage and can build cash value over time, which can allow you to leave more to a spouse or loved ones. The cash value can even be borrowed if needed later for any purpose, including retirement income, usually tax-free if the policy remains in force.
Step 3: Create or Update Your Estate Plan
Estate planning isn’t just for the wealthy — it’s a comprehensive strategy that includes key documents like a will, power of attorney, and healthcare directives that help ensure your family remains protected and your wishes known and properly documented in case you become incapacitated or pass away.
Step 4: Contribute to Long-Term Savings or Retirement
Starting early and consistently contributing to retirement accounts like a 401(k) or IRA can significantly influence the financial future of both you and your family. Due to compound growth based on stock market performance, even small contributions can grow substantially over time. The key is to begin as soon as possible and remain consistent. A 401(k) is an employer-sponsored retirement plan. With a traditional 401(k), contributions are made with pre-tax dollars, potentially reducing your taxable income in the year of contribution. A Roth 401(k) uses after-tax dollars, with qualified withdrawals typically being tax-free. Many employers also offer matching contributions, which can boost your savings even more. On the other hand, an IRA, or individual retirement account, is opened and managed by yourself. And like a 401(k), IRAs come in two main types: traditional and Roth.
Step 5: Consider Education Savings
Many fathers strive to give their children the very best. That means taking care of their needs today while also planning for their future, including making sure they have the opportunity to pursue a quality higher education. Starting a college fund early can not only make this goal more manageable, but also give you greater flexibility. Common options for saving include 529 college savings plans, Uniform Transfer to Minors Act (UTMA) or Uniform Gifts to Minors Act (UGMA) accounts, Education Savings Bonds, and traditional savings accounts and Certificates of Deposit (CDs), but you can also consider life insurance and other strategies. Recently, legislation made 529 plans owned by grandparents not included in calculations used to determine eligibility for grants and scholarships on a student’s FAFSA application.
Step 6: Model Healthy Financial Habits
Finally, demonstrating positive habits like budgeting, saving, and responsible spending is essential. How an adult manages their own finances is often shaped by the lessons they learned throughout childhood. Since children begin to mimic their parents’ behavior from an early age, fathers have a unique opportunity to teach financial responsibility through three key methods: modeling good habits, having open discussions about money, and providing hands-on experiences. The financial values you demonstrate today can become one of the most enduring parts of the legacy you leave behind. By taking these intentional steps, you’re working toward your family’s financial future and helping empower the next generation with the tools and mindset that support long-term financial well-being.
Contact us if you need help with financial advice, including guidance on building a stronger future for your family. Contact your Park City Financial Advisors today!
Sources:
https://www.fidelity.com/learning-center/smart-money/emergency-fund
https://www.forbes.com/advisor/life-insurance/term-vs-permanent-life-insurance/
