hen you are first married and starting a family you face perhaps the most daunting financial pressures you’ll encounter at any stage of life. A new home and young children bring with them a crush of expenses, even though you probably are still early in your career and far from your peak earning potential. Meanwhile, you also need to begin saving for the future – college seems just around the corner for your kids, and it’s never too early to start planning for your retirement. How can you address all of these obligations at once?

The key is to understand that you are at the beginning of a long-term building process. Financial security comes from a combination of insurance, savings and investments that are accumulated over time. Start small and cover all your bases. As you progress in your career, and your income grows, your financial security will grow as well.

Protection First

The first step in establishing your financial security is to confront the biggest threats to it. That requires asking yourself some tough questions: What would happen if you or your spouse became sick or injured – or died? What if you lost your job? What if your home was seriously damaged in a storm or by fire? What if you were in a serious auto accident? All of these situations are potentially devastating to your family’s financial health. That’s where insurance comes in.

Life insurance can provide your family members the resources to maintain their lifestyle when you die. It can replace some or all of your income. It also can pay off debts and cover funeral costs. It can even help fund longer-range needs like college tuition or retirement. Don’t forget to insure your spouse as well, even if he or she doesn’t work outside the home. A stay-at-home parent provides vital household services that would be expensive to replace, like childcare, transportation and household chores.

Life insurance is a must for any young family, and disability insurance is no different. A young person is actually four times more likely to become disabled than to die. Disability insurance will replace a portion of your income if you are unable to work due to a disabling illness or injury. Why is that important? Think about how long you could make ends meet if your paycheck suddenly disappeared because of a disabling event. Surveys indicate that a large majority of workers wouldn’t make it more than a month before serious financial sacrifices would have to be made. Many larger companies and some smaller ones offer some disability coverage to employees through a group plan. If you need more, it may make sense to buy additional coverage through your employer’s group plan, if it is available. Buying your own disability insurance policy outside of work is another option worth considering. Unlike group coverage, privately owned insurance stays with you even when you change jobs.

Health insurance is also a must. Most Americans have health coverage through their employer’s group plan. If your spouse also works, choose the plan that provides the highest level of family coverage. If you don’t have health insurance through work, look into to buying an individual policy for you and your family. It’s generally more expensive than group coverage and may create a strain on your family budget, but it’s the only thing that will shield you from the catastrophic costs associated with major surgical procedures and hard-to-manage chronic medical conditions.

If you borrow money to buy your home or auto, the lender will require you to purchase at least some insurance to protect your investment. In addition, state laws require drivers to have liability insurance as well. But don’t assume the minimum required level of home and auto insurance is enough. Consider adding inflation protection to your homeowners insurance so the policy will continue to cover your home’s replacement value in the future. And make sure the liability coverage in your homeowners and auto policies is enough to protect you in all contingencies.

Start Saving

Given all the costs a young family faces, the idea of putting any money away may seem impossible. But it’s crucial to get into the habit early, and it’s important to have a source of cash to fall back on in an emergency. If you start setting aside just $25 a week, and it earns a 6% annual return, you’ll have a nice, $31,000 nest egg after 15 years. If you have credit card debt, your first priority should be to pay it off. High interest rates on credit card debt can turn into a long-term drag on your family’s financial health.

Invest for the Future

If you haven’t already, you should immediately enroll in your company’s 401(k) retirement savings plan. This will probably be the primary source of your retirement savings, so you should start early. Some companies match employee contributions to these plans, so not participating is like turning down free money.

A 529 college savings program is an excellent way to put aside money for your kids’ college tuition. You won’t have to pay taxes on your investment gains from the plan as long as you use the money for legitimate education purposes. In addition, some states offer tax deductions to residents who contribute

to these plans. Another college savings option is a Coverdell IRA, though it comes with restrictions

on your income level.

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