Why You Need a Financial Plan for Your Family

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Financial planning might be a daunting task and seem like something you can look into when you have more time, but there is no time like the present when it comes to taking charge of your family’s financial future.  Every day you spend procrastinating instead of saving, takes funds away from your family’s future. 

Your first step should be to commit to saving.  Your paycheck will not last forever, your children will want to go to college,  and you will have life emergencies that will deplete your bank account if you do not start saving.  An emergency fund is a good place to start putting a small percentage of your paycheck every week.  Ideally, you should build this fund up to at least two-three months worth of paychecks.  This account should cover a short time out of work, new appliances, or home or car repairs. 

Develop a family budget that everyone can adhere to without much difficulty.  Track where your money goes at all times.  This is a simple way to see where your priorities are and determine what is important and what is not.  Together with your significant other, discuss what long term financial goals you would like to accomplish.  Then reevaluate and update your financial status with each other once a month.

Eliminate debt as fast as you can.  Moving forward will be easier if you don’t continually owe interest-accumulating debt to others.  It can be very easy to ignore debt, but address it and make arrangements to pay it off as quickly as possible.  That cloud will be gone, your credit score will rise, and you will free up income to go to more important uses.

If you haven’t already, check with your employer to find out what type of retirement funds they have available to you.  Retirement can be expensive and will get here fast.  Experts suggest that you will need at least 70% of your pre-retirement income to live comfortably, or more if you want to maintain your family’s current standard of living.  You may also have more medical expenses as you and your spouse age, so you definitely need to take these possible scenarios into consideration. 

Your employer’s retirement savings plan could be very beneficial.  Many times taxes will be lower and the company may contribute funds.  Automatic deductions from your paycheck make it easy to save.  Compound interest and tax deferrals on your balance can be a huge benefit to how much you can accumulate in a retirement account. 

Learn and do research on other investment options as well, such as real estate.  Talk to a professional financial advisor (who is not marketing or trying to sell things) to find out what is right for your family’s situation if you are not sure where to invest.  Investing in a variety of options can be best to reduce risk and improve return on investments.  You can shift and change them when needed. 

Putting money into an Individual Retirement Accounts (IRA) is also a good way to save money for retirement.  You can contribute up to $5500 per year or more if you are over 50, and they provide some good tax advantages over regular savings accounts. 

Figuring out your main goals as a family (college funds, retirement, medical expenses, real estate transfers, etc.) will help you find which specific paths to budgeting and saving you should take.  Start a plan today and you will be set for the future! 

[Photo via Pexels]

Jackie Waters is with Hyper-Tidy.com where she helps people create organization and tidiness in their life through ever day diligence and balance. Her journey has been full of challenges and she shares her lessons along the way including this valuable blog of why it is crucial for your family to have financial plan in place.