Our family is one of our most prized and beloved possessions, so, it’s natural that we want to provide the best future possible for them. Regardless of the stage, your family is at, whether you’re preparing to start a family or you have a well expanded one, it’s never too early to take steps to ensure their financial future remains bright and secure. The reality is that while a family brings with it an abundance of love, memories and joy, it also comes with its own set of costs. Housing, education, clothing and even the monthly utility costs are just some of the expenses we have to contend with as our family grows and goes through its different stages in life. We all want the best for our loved ones, and taking financial steps now to ensure their future is a great way to ensure that your family saves money and in the end, help your financial freedom dream become a reality.
Make Budgeting An Inclusive Event – Including The Review
For any family looking to keep their costs down, large or small, budgeting is their best friend. Keeping your family’s costs down means some of your annual income can be to put towards other family financial goals, such as college funds, retirement savings and even investing. However, for budgeting to truly work, the entire family needs to be on board, spouses and children alike. Getting your partner on board with your budgetary efforts and moves to cut costs where possibly can not only double your efforts, but also helps you achieve your goals faster and easier. If one member is cutting costs and sticking to the budget while the other does not or continues to spend unnecessarily, then, in short, they are hindering your progress as a family.
When it comes to children, it’s never too early to teach them good financial habits. Including them in simple tasks such as designing a budgetary chart for the family or helping you sum up the total for the weekly groceries are great ways to help them feel involved and teach them integral financial lessons at the same time. You should also consider having family-friendly budgetary meetings/check-ins with everyone at once, but be mindful of younger members of the family. Make it a fun event so that it will hold their attention.
Arm Them With A Solid Financial Education
In fact, a lack of financial education amongst Americans is one of the largest issues we currently have today when it comes to managing family finances. Learning habits such as budgeting from an early age means that young people are well prepared as they enter the teenage years, college and even when they start their own family one day. It’s also a crucial part of the answer to breaking the debt cycle that so many of us continue to experience. By taking the ample opportunities that present themselves each day to teach your family (adults, children and everyone in between) about some key terms in finance, you are arming them with the best tool when it comes to their financial lives: knowledge. In the end, you are increasing the likelihood of every member of your family making good financial decisions that affect your family’s financial picture overall. Remember, what each member of the family does plays a part in achieving the financial security you seek. Simple lessons and key concepts such as the rewards of savings (think interest rates paid on checking accounts), and the workings of consumer credit including borrowing are some great starting points for your kids.
Build Your Family’s Security – And Encourage Them To Do The Same
When you think of your family’s future, chances are one of the aspects that comes to mind is their security, including financial security. Everyone wants to know that should anything occur, their family is protected and safe. This is not limited to illness or death either, but also covers loss of employment, the birth of another child and even the progression of a current child from high school to college. All families go through stages, and with these stages, come new costs. Start with including allocations in your household budget every month, including a rainy day fund. It is recommended that you aim for the equivalent of at least 6 months of household expenses, including housing costs. According to data from BankOfAmerica, this is about $1,400 per month, but can vary according to state and city. It is also wise to add some extra to this amount for families, since there are many other variables, such as childcare, dental treatment, and those unexpected school costs that tend to pop up.
You will also want to allocate some savings to your retirement plan, whether it is into a savings account, IRA Roth or an investment account. Most people prefer to split it so that they have some savings and also a portion of savings working to increase their wealth through investing in stocks or real estate. Families also spend over $233,000 to raise children, and these costs can come fast and heavy, so setting up a savings account for kids is a great idea, and helps kids become financially savvy in the future.
Finally, but more importantly, get your family on board with these habits and encourage them to build their own security. This means helping your spouse discover the best savings and retirement options for themselves, and discussing securing medical and life coverage for each other. Don’t forget to include your kids, and encourage them to build their savings when they get their first job, and particularly in the lead up before heading off to college. The more they have saved up, the less they are going to rely on student loans and other forms of debt (and the less you’ll have to too). A family’s financial freedom is a joint effort. With the help of your loved ones and a solid plan, you can feel more comfortable about your family’s financial future in no time.