Getting into good financial habits is critical for many growing families. Raising children can put a strain on a family’s finances, and when the kids are very little, it is likely that one parent will have to give up work or at least reduce their hours. Like any skill or habit, it takes practice for these methods to become ingrained.
One habit that should always be practiced is that of reviewing and assessing your finances. Knowledge is power, and the better you know your financial situation, the better equipped you will be for the future.
Reader's Roadmap
Be Specific In Your Financial Life Goals
Having clear and specific goals is crucial to help you achieve financial freedom. Include specifics like how much you want to have saved, how old you want to be when you have saved it, what you want your lifestyle to look like and more. The better your vision of your financial future, the easier it will be to stay on track and ultimately achieve your goals.
Automate Your Savings
Having savings automatically deducted from your paycheck as it arrives can be critical to building up your reserved cash. It is also essential to keep your income for expenses, savings and emergency fund separate, ideally in different bank accounts.
Consider setting up an automated payment that puts a set amount of your monthly income into your savings and emergency fund accounts, leaving the rest in your main account for the month ahead. Avoid dipping into the other accounts unless absolutely necessary. It is also best to look for a quality best high-yield savings accounts to get the most out of your savings.
Start Making Small Investments
Investing is another key habit to learn that will help you achieve financial freedom and stability. Investing can often feel confusing and complicated, so it is important to do your homework and understand how investing works. Starting small with modest sums and low-risk investments can be ideal.
Opening a brokerage account online can be a good first step and will allow you to learn the ropes in a controlled environment. Avoid making big investments and craft a portfolio of varying risk profiles to see the steadiest returns.
Build An Emergency Fund Of Six Months Income
Any financial emergency can put significant strain on a family, so it is critical to have a substantial buffer. This buffer can be used in the event you lose your job, for unexpected bills or other large drains on your finances. It is best to have at least six months of your regular income put aside in case of emergencies. This will give you a considerable buffer that will allow you to weather many financial storms.
Monitor Your Credit Score
Understanding and monitoring your credit score is essential to getting the best terms and interest rates on credit cards, loans and mortgages. It can also impact the premiums you could pay for insurance and other critical financial investments.
You should use a credit score checker regularly to ensure that your score is strong. Always read and check the details and transactions and if you notice any discrepancies, raise them immediately, as this could be a sign of fraudulent activity.
Negotiate When Contracts Renew
Negotiating on the price of things is a crucial way to save money. This can be particularly advantageous when contracts reach their renewal, as you can shop around for better deals and use these as leverage with your current providers. Always negotiate for things like utilities, cell phone contracts and insurance.
Use A Personal Income Statement
A personal income statement can be an excellent way to monitor your financial situation and compare and contrast incomings and outgoings. It can help you plan more effectively for the future and identify areas for improvement in your current financial practices. You can find out more about making a personal income statement from the professionals at Tally.
Take Care Of Your Belongings
The better we care for our belongings, the longer they will last and the more they will be worth if we decide to sell them. This can be applied to all types of belongings, from clothes to cars to property. Learn how to care for the things you own and avoid the cost of unnecessarily replacing items that might have had good years left in them.
Understand which of your belongings is an investment that could bring you income in the future. For instance, learn how to properly store valuable wine or artwork and keep your property in good working order.
Talk To A Financial Advisor
Getting regular advice from a financial advisor can be another excellent way to reach financial freedom. You should look for an advisor with extensive experience working with people in similar financial situations to your own. Let them know your financial life goals and provide them with all the information they need to give you precise, useful advice.
Ensure You And Your Family Life A Healthy Lifestyle
Medical bills are one of the biggest unexpected expenses that an American family can face. Even with excellent insurance, some procedures and medications may not be covered, and the costs of ongoing care can mount up quickly. An excellent way to protect yourself, your family and your finances is to reduce the chances of developing a preventable illness.
Do regular exercise and eat a healthy balanced diet to reduce the odds of developing a range of long-term illnesses like heart disease, issues with bones and joints, diabetes and cancer. If you ensure your kids live a healthy lifestyle early in their lives, it will likely become an ingrained habit, ensuring they will live longer, healthier lives.
Teach Kids About Money Early
The earlier you talk to your kids about money, the more likely they are to be financially savvy when they grow up. You could start when your kids are learning about counting and use age-appropriate terms. Consider giving your kids small amounts of allowance to discover for themselves the responsibilities of saving and spending their own money.
You could also encourage positive financial habits in your kids by making saving and financial literacy fun. For instance, you could make a game out of who can save the most of their allowance each month.
Learn How To Avoid Impulse Shopping
Impulse shopping can be a challenging issue to correct. Most impulse shopping occurs without us being fully aware of it. Fortunately, there are steps you can take to mitigate the amount of impulse shopping you find yourself doing. One excellent way is to give yourself a cooling down period before making any purchase. This gives you a chance to reassess to come out of the moment and assess.
A good way to avoid impulse shopping in your weekly grocery shop is by making a list and sticking to it strictly. In addition, avoid shopping while hungry as this can make it likelier that you will make impulse purchases, even when you’re shopping for things other than food.
Take Out Comprehensive Insurance
Insurance is crucial to protect yourself and your family in the event of a disaster or emergency. Life insurance, for example, covers death due to natural causes such as cancer or a heart attack, ensuring that your loved ones are financially secure should the worst happen. If you don’t have coverage but are already ill, look for a policy that offers life insurance with cancer cover. It may be more difficult to find, but they do exist. Insurance can make the ideal addition to your emergency funds and savings. You could look for income protection insurance that will cover your salary should you become unable to work.
You should always take out an insurance policy after major life events like having kids, getting married, or buying property. It can also be beneficial to take out top-up health insurance cover for your peace of mind.