It’s been 18+ years paying for their food, cell phone, and Netflix, and now the kids have finally left the house. After taking in the new household silence, it’s time to take a look at your budget and readjust for your new priorities.
For some, it’s the right time to begin rebuilding the balance sheet. Raising children can mean built up debt, and that retirement savings came second to college funds, sports teams, and other expenses. Even though every parent’s new budget will look different after the kids leave home, here are four steps to make sure you’re on the right track.
Plan for the future
We all know that parenting doesn’t end just because the children are no longer home. College decisions can play a big part in determining how much parents continue to pay for kids, depending if you’ve budgeted for it or not. Parents who have set aside savings for college might be able to easily help with tuition expenses. Those who have not put savings aside will need to determine if they want to take money from their cash flow, or take out loans to assist through college years.
College is not the only cost to think about. You many need to plan for other big life expenses like weddings, first homes, and grandchildren. Spouses should agree ahead of time what type of financial assistance they want to provide for their adult children, and budget accordingly.
Paying of lingering debt is the next step for most empty nesters. One of the largest goals is to pay off their mortgage. It can be difficult to go into retirement with a home loan. Use the remaining cash that would have gone to your children’s expenses and make larger payments on your mortgage.
Bump Up Retirement Savings
Now is the perfect time to put away as much as possible into your retirement accounts. Review your past bank statements to estimate your children’s costs, and use that as a starting point to give yourself a retirement savings boost.
Give a Little to Yourself
With the kids gone and debt paid off, you may find yourself with a significant amount of disposable income. Now what do you do with it? There’s no shame in spending it on yourself, financial experts say. The major part of your parenting years are done, so take your dream vacation, upgrade your vehicle, or freshen up your home with a remodel or new appliances. Of course, you will need to still be careful of not overspending and continue to budget as you normally would.