ESTIMATED 2MIN READ
“Fear of missing out” is a phenomenon that many new parents and young families contend with in multiple facets of their lives. It can be a contributing factor to poor financial decision-making. One area that I see many young folk falling victim to this phenomenon is in investing. Social media has played a huge role in encouraging people to share every detail of their lives and this has extended to investment strategy.
FOMO comes in when you find yourself feeling anxious about the fact that you see people sharing their investment successes and you are falling behind because you haven’t done the same thing or enjoyed the same success. This phenomenon has been most noticeable in cryptocurrencies and “meme stocks” and has contributed to increased volatility in those markets.
The best piece of advice that I can give to a young family that is thinking about the merit of investing is to be deliberate in your financial planning and to avoid getting ahead of yourself. Don’t allow FOMO to seep in and cause you to make a financial move that you are not ready for. The following are some financial considerations that young families should keep in mind and take care of before focusing on investments.
- Emergency Funds – each family will have a different set of circumstances and a different funding level in an emergency fund
- Risk management- as a family grows, it is exposed to more risk. Proper reviews of your risk and insurance policy design should be done periodically
- Legal documents such as Will/POA/Living will – make sure they are up to date. Many young parents will not have legal documents yet. This is your sign, hire an attorney and get them done.
- Income and expenses can fluctuate so a consistent focus on budgeting and expense control has to take priority to investment strategy for young families.
- Income protection: The largest or most valuable asset for a young family is the future earning potential of the breadwinner. Consider insuring that income.