When it comes to organising your family’s future, creating a plan for your finances is really important. Without a plan in place, it is easy to spend more than you earn and to dip into savings without really thinking about how that could impact your family’s future. As the world continues to become more uncertain, it is now more vital than ever to have a plan in place for your family’s financial future.
Create a Household Budget
A key part of planning for your family’s financial future is creating a realistic budget. Tracking the monthly incomings and outcomings of your household is essential, as it can be easy to spend money mindlessly if you are not conscious with your spending. It is important to keep a budget realistic, otherwise, it will become impossible to stick to, and therefore useless. When creating a budget, you should calculate:
- All Household Incomes
- All Household Outgoings, Including Bills Such as Mortgage or Rent, Utilities, Car Re-payments, etc
- All Outstanding Debts
Once you know exactly how much money is coming in and going out every month, you will be able to find areas where you can make savings and gain greater insight into a true assessment of your finances. Although overspending can happen sometimes, for example, an unexpected bill or repair, to overspend regularly could put your family at risk of spiralling into debt, so it is important to have a budget to track all your household expenditure.
Some families like to budget just for the month, whilst others prefer to also factor in a yearly budget plan too, which can be particularly useful when it comes to goal setting.
Paying down high-interest debts as quickly as possible is essential in order to secure your family’s financial future. Any debts that are not cleared will delay you from being able to focus on savings, and if there are any outstanding debts after death, these will then fall to your family members to clear too. Paying off your mortgage, if you have one, should be one of the primary focuses when it comes to considering your family’s financial future.
Without a mortgage debt, there is much more money each month that can be put towards other savings goals instead. If you are struggling with other forms of debts, such as loans or credit cards, always contact your bank or local citizens’ advice, who will be able to assist in making a plan to clear down this debt as quickly as possible without incurred more prohibitive charges.
Be Proactive at Setting Financial Goals
Setting goals is a key part of planning for your family’s financial future. Whether your goals are short time, such as saving for a child’s education, or long term, such as buying another property or adding to a pension pot, then setting a time frame for when you want to achieve them is an excellent way to stay focused and track your progress.
Review Budgets and Goals Regularly
Once you have your budget in place and have set the goals you want to hit to secure your family’s financial future, it is important to review these regularly. Over time, household incomes and outgoings will naturally change, so it is essential to continue to update your family budget to reflect this.
As you achieve your goals, you may want to set new ones, so the setting of goals too is a constantly evolving process that needs to be reviewed regularly.
Always Have an Emergency Account
Having an emergency account is a very sensible way to help protect your family financially. Even if you are able to stick to a monthly budget, have minimal debt and are actively seeing progress towards your financial goals, an emergency can always happen.
In these instances, having an emergency account can provide the money you need, without having to dip into other savings or use credit cards. An emergency account should be kept separate and should be able to cover up to 3 months worth of household outgoings and should only be touched under the strictest of emergency circumstances.
Make a Will
Making a Will is vital to ensure your finances are protected and that they pass to your family appropriately. Without a Will, you are putting your family at risk of not receiving money or property that is rightfully theirs and creating a whole host of problems on when and how an inheritance can be received.
To avoid dying intestate, draw up a Will as soon as possible. A Will can always be amended as your finances change, but to not have one in the first place will put your family’s future in a dangerous and precarious position.