Worrying about the family finances can take up a good chunk of your time and energy, which really just adds to the many challenges that parents already face on a regular basis. It may seem like a tall order, but you can actually plan for your family’s monetary needs—both present and future—in advance, with a few solid and well-placed practices. This will invariably contribute to your financial health and long-term peace of mind.
Have a budget.
A budget is at the core of your family’s financial stability. With kids who need to be educated, fed, clothed, sheltered, entertained and more to think about—plus your own needs as parents, of course—your income can quickly feel the stretch. However, creating a budget will surely keep you on track, so you’re not only guaranteed to live within your means, but also have enough left over to save, too.
Tracking where your money goes can be challenging, especially if you have more than one person making purchases and/or an income. The best way to stay on top of things is to add an app to your phones that makes it easy. Educational App Store suggests considering budgeting apps like Goodbudget Budget Planner if you’re using multiple devices, or Splitwise if you’re divvying up expenses. Contemplate what will work best in your situation and put it to use! Another option is to hire a CPA freelancer if you’re struggling to get a handle on your finances. A certified public accountant may be aware of tax deductions that you or your business are eligible for which can lead to substantial long-term savings.
Rethink your expenses.
As a part of budgeting, many families find they need to cut some expenses to meet their financial goals. If you really take the time to keep track of your expenditures at any given time, you will likely be surprised to find that there are multiple opportunities available by which you can save money. More often than not, all it takes is a few strategic lifestyle changes.
Case in point, you may find that your household utilities (electric, gas, water, heating, etc.) are taking up much too big a chunk of your income. It’s a good idea to think of ways to cut down on your consumption. Chances are good there are lots of ways you can do this, too.
For example, you can install storm windows and clean up your furnace for more efficient heating. You can also opt to invest in energy-efficient appliances, which will offer considerable ROI on your future electric bills, or a rainwater reservoir that you can use to wash your car or water your garden. You can even save on fuel costs by carpooling or better yet walking or cycling.
Of course, when financial planning as a parent, you definitely need to consider your savings, too. CNBC explains this begins with an emergency fund. This is money that you can access for contingencies, such as losing your job, experiencing a sudden illness, or worse. As a rule of thumb, this fund should amount to six to nine months’ worth of your income.
There are also other savings that you shouldn’t put off. If you’re going to buy a house, you’ll need enough money set aside for a high down payment (at least 20%) in order to avoid paying each month for private mortgage insurance. Plus, if you go this route, you won’t have to pay as much in interest.
Of course, you should also be saving for your kids’ educational fund. This will definitely come in handy when your children start going off to college as tuition fees are not trifles that you can address when the time comes. Another area to save for is your own retirement fund. Your inevitable retirement may still seem like a lifetime away, but again, the truth is, the sooner you plan and allocate funds for it, the more comfortable you will be in old age.
And finally, don’t forget insurance! This can run the gamut from health care to life to even burial, but essentially, they all serve a similar purpose—to alleviate financial burden and provide for you and yours in untoward events like critical illness or death.
Indeed, it’s not just ‘good’ to have a financial plan when you are a parent; it’s a real necessity. So do yourself and your family a favor: Start exploring your options and taking concrete steps toward financial freedom.
For high-quality insurance services combined with the lowest rates available in your area, connect with the Willoughby Insurance team today at (716) 885-8100!