As you begin your journey toward a family of your own, you may be thinking about how to set new family traditions that build financial confidence and prosperity. From starting a business to owning a home and watching your kid graduate (maybe even crossing the stage at Howard University or Florida A&M), these goals and traditions can be within reach. That’s something to celebrate and go after!
But as your success gains momentum, you might have questions about what to do financially. That’s OK, we’re here to help so you don’t have to go at it alone.
Family milestones—like seeing your kids graduate without a huge amount of college debt or supporting your community—take planning. Storing cash or leaving money in a savings account will only get you so far. The key is to get started now and take advantage of financial tools, including some you may not have heard enough about.
To help you reach financial confidence and set new family finance traditions, consider these five key steps:
1. Prepare for your family’s education
While there are several tax-advantaged accounts that let you save for education, the most common is a 529 plan. The account will grow tax-free, then as long as your beneficiary uses the money for qualified educational expenses, they won’t owe federal tax when they withdraw the funds. And there are new opportunities to use the money for a beneficiary’s retirement if it’s not used for education. Most states do not tax qualified payouts (distributions), and you even get credit or tax deductions now.
2. Save so that you don’t have to work some day
Retirement for us will be different from what our parents and grandparents had. It’s smart to put money away for retirement as soon as you’re able, so check whether your employer offers a plan like a 401(k) or 403(b). These accounts allow you to save on taxes as you save for a comfortable retirement, and you typically contribute the money directly from your payroll. If you’re self-employed or a plan isn’t available through work, look into an Individual Retirement Account (IRA). It’ll work a little differently than an account sponsored by your employer, but will help you save—while keeping more of your money instead of paying it in taxes.
Investments can be a great way to grow your money over time. But investments alone can leave you vulnerable. That’s why it’s so important to include strategies to help protect the income that you’ll use to create generational wealth.
3. Safeguard your family’s financial stability
You may think of life insurance for funeral expenses, but there’s much more to it. A policy helps your family’s financial stability if you pass away earlier than expected. Life insurance can help ensure your loved ones may be able to keep the family home, avoid picking up another job and achieve their college dreams.
You have many types of life insurance to choose from to meet your needs and your budget. Term life insurance will pay a death benefit during a certain time frame. But there’s also permanent life insurance, which pays a death benefit no matter when you die—and includes additional benefits that you can use when you’re alive.
Whole life insurance, for example, provides a life-long death benefit and builds cash value that’s guaranteed to grow year after year. Once your policy builds up cash value, you can access it for any reason, like to upgrade your house, help pay for education or take advantage of a business opportunity. But accessing cash value reduces your death benefit.
4. Strengthen your family’s safety net
Your ability to earn a living is probably the most important financial asset you have—it funds all of your expenses and goals for the future. While it may not seem like it, even an ordinary paycheck adds up over time. All your pay will total hundreds of thousands of dollars, maybe even millions over your lifetime. Unfortunately, disability is fairly common—about one in four people will become disabled by illness or injury before age 67.1
Disability income insurance can provide a critical safety net, allowing you to cover your expenses and continue building your wealth if you’re unable to work due to injury or illness.
5. Talk to a financial pro
The good news is that you don’t have to figure this out by yourself. Talking with a financial expert can be a game changer. In fact, Northwestern Mutual’s 2024 Planning and Progress study showed that, on average, African Americans who work with us:
- expect to retire more than two years earlier (age 61.1 versus 63.5)
- plan to pay off college debt 5.5 years faster (pay off at age 40.7 versus 46.2)
- have nearly three times as much in retirement savings ($71K versus $26K)
Our financial professional will ask thought-provoking questions to guide the conversation. They’ll learn about your biggest financial fears and deepest dreams to tailor a financial plan with recommendations just for you.
Learn more about building generational wealth with Northwestern Mutual.
1. Based on today’s 20-year-olds. U.S. Social Security Administration Fact Sheet.
This article is part of a paid program.
Northwestern Mutual is the marketing name for The Northwestern Mutual Life Insurance Company (NM) (life and disability insurance, annuities, and life insurance with long-term care benefits) and its subsidiaries in Milwaukee, WI. This article is not intended as legal or tax advice. Consult with a tax professional for tax advice that is specific to your situation.
