Financial planning for your own differs from that of your family. When you have a family, you are more concerned about your kids. As a parent, you want to fulfil all the needs of your children, from providing the best class education to a successful career.
When it comes to financial planning, you cannot do it on your own. You will need the help of your spouse to figure out how much money you have and to set goals together, and decide what you need to do to achieve them.
However, you will have to look at your current spending. The money you earn and your current expenses must align with goals you have set to achieve down the line.
For instance, if you have decided to save money for your children’s higher education, you need to determine how much you need to contribute every month to have set aside enough money by the time you need it and whether your current budget has the potential to allow you to stash away that particular amount of money.
Tips to make a financial plan for your family
Here are some tips that you must follow if you want to plan around your money.
Work on how to achieve that goal
First off, you need to set a financial goal. You will have to plan around your money based on the need of your kids. For instance, not every child goes to university. There is no point in setting such kind of financial goals.
You should identify what your children want to do. For instance, you know that your child will buy a home one day, so you can decide to help them with a deposit.
Suppose you decide to stash away £10,000. You need to determine how much money you need to put aside every month, so it and the interest add up to £10,000.
You can use various online calculators to know how much you will have to set aside every month to reach your goal and how long it will take.
Create a family budget planner
A family budget planner will focus on those goals you have set for the future. There is no doubt that your current spending must align with them. Otherwise, you will be off track. You should know how much money you need to contribute every month.
Make sure that you are able to do it quickly as soon as you receive your paycheque. Then find out how much money you are left because that portion will help you meet your regular expenses. This is why it is recommended to have a monthly budget so you can track your expenses.
If you spend more than you are allowed, you will not be able to set aside money for your future planning successfully. It is crucial to track your spending so you can meet all your regular expenses and save for your future financial planning.
You can maintain a spreadsheet to track your expenses. However, if it is difficult to track your expenses manually, you can take the help of budgeting apps. These apps can automatically track your spending and notify you as soon as you come closer to the verge of overspending.
When you have an app to control your overspending habits, you will save money for your future goals without compromising your current expenses.
Be careful with borrowing money
It is not easy to successfully implement financial planning for your family if you have outstanding debts. When a significant portion of your money is going toward debt repayment, you will not be able to save money for your future goals.
This is why it is recommended to settle all outstanding debts. Further, it is necessary that you do not take on a loan to fund regular expenses. Loans are expensive undoubtedly. If you borrow £500 from a lender, you will be paying more than that because of interest payments.
You should create an emergency corpus. This will help you tide over during emergencies. For instance, if you need money to have your laptop repaired, you will not need to rush to lenders to borrow money because you can dip into the emergency fund.
However, sometimes you may still need to borrow money. In that case, you can take out unsecured bad credit loans from direct lenders.
If you have a bad credit rating, Try to improve it. With a good credit score, you will be able to borrow money at affordable interest rates. If you make all payments on time, this will boost your credit score.
Invest for a long time
Saving is not enough to save money for your goals. It will help if you make sure that the money grows with each passing day because the value of money tomorrow will be less than the value of money today. This is why the money you are saving for your goals must grow. Otherwise, you will never be able to accomplish your goal.
The best way to grow your money is by investing it. Of course, you will be hesitant to invest your money if you do not have even a piece of basic knowledge about it.
In that case, you should consult an investment expert who can guide you to the correct type of assets in which you can invest based on your current financial position and investment goals.
You do not need to throw all of your money into a single type of asset because your whole money can go in vain if the market acts against your expectations.
Apart from investing money, you should also open a high-interest cash savings account. Talk to your bank if they can let you avail of this facility.
The bottom line
Although you have an option of taking out loans without a guarantor, it does not mean that you do not need to plan around your money. You will have to start making a strategy as soon as possible to achieve your financial goals.