A 4-Step Plan for Breathing Life In Your Family’s Finances

I know many people who’ve mastered the art of successfully managing their personal finances. They walk around with zero credit card debt, plenty of cash in the bank, and they seem to always have money for extras, such as vacations, home improvements, etc.

This, however, isn’t exactly the reality for the majority of the population. Sure, you may know the importance of getting a handle on your personal finances, as this is one of the best ways to secure your financial future. But with everything else on your plate, taking the first step is easier said than done.

Between cooking, chores, work and caring for your family, when exactly are you supposed to have time to assess your financial and credit health?

The truth is, you probably won’t have the time. Topics related to money, debt, credit, and savings aren’t the most exciting It’s far too easy to put off financial planning until tomorrow, or next year. However, your finances aren’t going to improve on their own. And if you constantly put off planning, you might be caught off guard down the road.

Even if you don’t want to improve your situation for yourself — do it for your kids. The money decisions you make today not only affect your pocket, but also their future. It can impact whether you’re able to take them on a fun summer vacation, pay for their college education or buy a home for the family.

So, if you have more bills than income, or if you feel that your finances have hit rock bottom, here’s what you can do to flip the script.

Step #1. Tackle your credit score

Maybe you’ve let your credit fall by the wayside in recent years. However, this three-digit number plays a major role in your financial life.

“Your credit score is a key factor in determining the interest rates you pay for auto loans, mortgages, credit cards, apartment renting, and more,” according to Lexington Law.

Improving credit isn’t something you can do overnight. And because it takes time to regain lost points, some people give up before they make any real changes to their score, thus they remain stuck in the same place. Each time you feel like giving up, think of your children’s smiling faces. If this doesn’t motivate you to continue on the path toward recovery, nothing will.

The first thing you’ll need to do is grab a pair of scissors and cut your credit cards in half. If you cut off access to your cards, you can’t buy impulsively. With your cards out of the way, you’ll need to develop a plan to improve your payment history.

It doesn’t matter what’s going on in your life, never, never, never miss a minimum payment. Even if you can’t write a check to pay off your cards in full, paying your minimums on time each month can help you maintain a decent score.

Step #2. Learn to hate debt

Getting rid of your cards and fixing your payment history is just the first step. It’s certainly a big step given how your payment record makes up 35% of your credit score. However, getting rid of debt is another big piece of the puzzle.

You may wonder how you’re able to get rid of debt when you don’t have enough disposable income. It certainly takes money to eliminate debt, but don’t give up just because you don’t see an immediate way out. A little creativity goes a long way. And the truth is, the answer might be right in front of your eyes.

Take a look around your house. Are there items in your home that you don’t need? Perhaps furniture, toys, electronics or other items that take up too much space. Do you have a storage facility for overflow items? How much does your family spend on recreation each week?

Do you see where I’m going with this?

The problem might not be lack of disposable income, but rather spending your money in all the wrong places.

Bottom line: it take some sacrifice to pay off debt. This might mean skipping a getaway or vacation, or delaying another purchase. Or perhaps adopting a thriftier mindset to generate extra cash.

Nobody ever said that the journey would be easy, but it’s definitely worth the sacrifice.

Step #3. Save for a rainy day

There is nothing more annoying than getting hit with a huge unexpected bill and realizing that you don’t have enough cash.

We’ve all been here before, thus underscoring an important truth — everyone needs an emergency or rainy day fund.

Now, saving a rainy day fund might be harder if you’re also tacking credit card debt. However, even if you can only deposit a little into your account each paycheck, it’s better than nothing at all. Reevaluate your spending to see where you can cut back.

Do you really need 300 cable stations?

Is it really necessary to buy all name brand food items?

Could you carpool, walk or take public transportation to reduce automotive costs?

Start by reducing how much you spend in one spending category each month and putting the savings into your bank account. Also, you might look into automatic savings options offered by your bank.

Step #4. Get a life insurance policy

No parent wants to imagine dying and leaving their children. But this is a sad reality, and if you don’t prepare for an untimely death, you could leave your spouse with a ton of debt and little income.

The death benefit from a policy might pay off your home loan or auto loans, provide ongoing financial support, and even pay your children’s future expenses, such as college or a wedding. And the sooner you get a policy the better. It’s easier and much cheaper to get life insurance when you’re young and healthy.

You don’t have to be a personal finance expert to recognize the best money moves for your family. But you will need to get proactive, make sacrifices and develop a plan that’ll keep you on track — financially speaking.