Frugal Living

Plan Your Family’s Financial Future Now

When it comes to protecting your family, you’ll stop at nothing to keep them safe and secure. But how much time do you spend planning their financial future? It’s easy to postpone sorting out financial issues until another day but, for most people, this means muddling through from one month to another without any specific goals in mind.

However, your family’s wellbeing is partly dependent on your finances, so it’s vital to take control of your savings, debts and investments. By being proactive about your financial future, you can ensure your family are well-protected and have access to the resources they need.

2020 has been a financially difficult time for most people. The economic impact of COVID-19 has resulted in millions of people losing some or all of their income, which is why it’s more important than ever to reassess your financial situation and amend your future plans.

If you want to take control of your finances, take a look at these top tips for planning your family’s financial future now:

1. Conduct a Financial Audit

If you don’t know exactly what your household income or expenditure is, it’s time to carry out a financial audit. Similarly, it’s important to know how much you have in your savings account and tied up in investments, as well as how much you owe to creditors. If you only have a vague idea of these figures, or you’ve lost track of them altogether, don’t hesitate to dig out your documentation or log on to online banking platforms to access the information you need.

Once you know exactly what your financial situation is, you’ll be able to make realistic plans for the future. If you’ve been experiencing money worries, conducting a financial audit can feel overwhelming to begin with. However, establishing your starting point allows you to reassert your control and move forward.

2. Set Financial Goals

We’d all like to have a bit more money in the bank or extra disposable income to spend on luxuries, but it’s important to be specific when you’re setting financial goals. These targets will form the basis of your financial plan, so spend time thinking about what’s really important to you.

Financial goals should focus on short, mid and long-term objectives. You may want to put some money aside to pay for your kid’s birthday presents this year, for example, or you might be planning a dream family holiday in the next two to three years. Additionally, you might want to start a college fund, so that you’re able to support your kids in the future if they decide to attend university.

3. Create a Household Budget

Now you know what your financial situation is and what your goals are, you can create a household budget to help you achieve them. Your household budget is only useful if it includes every purchase you make throughout the month, so don’t hold back when it comes to noting down where every last cent goes.

From repeat costs, like your mortgage or rent, to annual expenses, like school uniform or vehicle servicing, be sure to include everything that you need to pay for so that your budget truly represents your financial commitments. With dedicated apps and free templates available online, it’s easy to find inspiration and ensure you’ve got every potential purchase accounted for.

4. Cut Your Expenditure

The vast majority of people find it easy to reduce their outgoings once they’ve compiled a comprehensive household budget. In fact, you’ll probably find there are numerous expenses you won’t even miss!

If you’re paying for subscriptions or membership you’re not using, these can be cancelled straight away, for example. Just make sure you’re not tied into any long-term contracts before you cancel your weekly, monthly or annual payment.

In addition to this, a quick comparison search can significantly reduce the cost of essential bills, like utilities or insurance. Although you won’t be able to eliminate these costs completely, you’ll be surprised at how much you can save.

5. Aim to Get Debt-Free

In Canada, couples with children have an average household debt of $144,600, so don’t panic if you’re in more debt than you thought. If you have a mortgage, it’s likely that this will account for a significant proportion of your debt, so things might not be as bad as they first seem!

Although it’s normal to have some form of debt, it can be problematic if your debt becomes unmanageable. If you have numerous high-interest credit cards, for example, you might be struggling to make the required monthly repayments, for example. Furthermore, making minimum repayments could result in the amount you owe actually increasing, depending what your interest rate is.

If you have multiple debts, these monthly repayments could be taking up a lot of your income. That’s why it’s important to have a sure-fire plan to reduce the amount you owe and get out of debt. You may be able to negotiate with creditors and get your interest rates reduced, for example. Alternatively, you may be able to access a lower interest rate by consolidating multiple debts into one loan.

6. Make the Right Investments

If you have funds to invest, you can grow your capital and protect your family’s financial future by making the right investments. However, if you’re new to investing, it’s important to do some research before you get started.

The stock market can be a great way to make money, for example, but there are risks involved too. By matching the level of risk you want to take to the types of investment you make, you can help to minimise the risk of losses and boost your returns. If you’ve never traded before, you’ll want to learn more about the different options available.

To get started, take a look at this article and make sure you know the difference between mutual fund and ETF investments. With Wealthsimple, you can access expert financial advisors whenever you need to, which can take the hassle out of investing. Furthermore, you can take advantage of automated tools, commission-free trading and dividend reinvestment to manage your investment portfolio quickly and easily. Check out this article if you need to learn more about how to ETFs kaufen (buy ETFs)

7. Plan Your Retirement

It’s never too early to start planning for your retirement, so don’t put it off until you’re approaching retirement age. Paying into a pension is a popular way to save for your retirement, so it’s well worth looking into the financial products that are available. Many employers offer workplace pension schemes and make monthly contributions to your plan, so this could be a viable way to maximise your retirement savings. Furthermore, there can be tax advantages associated with paying into a pension, so be sure to consider all the pros and cons before you decide what’s right for you.

Of course, a pension isn’t the only way you can save for your retirement. Alternative investments, such as real estate or even cryptocurrency can offer high returns, although the level of risk involved does need to be carefully assessed.

8. Consider Life Insurance

No-one wants to consider the possibility of them not being around to see their family grow but, sadly, it is something you should ensure you’ve got covered. By taking out life insurance, you can ensure that your family would have the financial support they needed if anything were to happen to you.

Additionally, critical illness insurance is popular with many families because it offers financial peace of mind. If you were diagnosed with a serious illness, for example, critical illness insurance will pay out a pre-agreed amount of money. If you’re unable to work due to ill health, having critical illness cover can alleviate financial worries and allow you to focus on your wellbeing.

However, there are many different types of life, health and critical illness insurance, so be sure you understand the different types of policies. A term life insurance policy will pay out a set amount if you die before the policy runs out, for example, whereas a whole-of-life policy will pay out whenever you die but involves paying much higher premiums. Similarly, some critical illness policies cover a vast array of conditions and diagnoses, while others are relatively limited in terms of which illnesses they extend to.

Taking Care of Financial Matters

As you can see, there are many things to consider when it comes to your family’s financial future. That’s why it’s important to get started as soon as possible. You won’t be able to make important financial decisions in an hour or two, so getting things underway now will ensure you’ve got the time you need to decide what’s right for your family.

Furthermore, taking stock of your finances now gives you the opportunity to access independent financial access. If you’re unsure how to deal with your debts or which investments are right for you, seeking advice from an experienced professional can give you the confidence and information you need. With the right assistance and a proactive attitude, taking control of your family’s financial future can be easier than you think.

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