As well as giving our families the best lives possible now, it is also important to many of us to think about future financial stability too. But what is the best way to focus your efforts to maximize the financial protection of your loved ones?
Financial planning can sound like a boring part of life admin. And if you’re not confident with numbers or don’t have in-depth banking knowledge, it can be difficult to know where to start. How do you decide where the best place for your money is? And how do you make your money grow rather than stagnate?
If you’re serious about protecting your family financially, here are some of the things you should think about.
Think About Now
The first piece of advice any financial advisor will give is to try to achieve financial security now. There is no point in saving vast amounts of money now, while ignoring any current debts you have. This is why it is important to have a solid plan for paying off any debts you do have first. These could be mortgages, student loans, credit cards and any other loans you may have. Keep on top of how much you have to pay back, how long it will take you, and whether you can pay the money off faster without negatively impacting on your life. All these loans will have interest rates of varying amounts, so paying your loans off also means you won’t be paying interest for longer than you need to.
Future Goals
Another crucial thing to think about is about any critical goals you have for the future, and what the associated costs may be. Some examples that most people want to consider include retirement and their children’s education. Retirement planning is a necessity for anyone, so it’s important you understand what retirement funds you will have access to and how much you can expect to be paid from them when you retire. If you can already see that this won’t be enough, start planning early so you can rectify this with enough time. You may want to work with an independent financial advisor to help you with this.
Something many people want to do if they can is to have some funds specifically to help their children in the future. This could be either for their education, or to help them buy a home. Since the cost of education and house prices will change in the future, it can be difficult to know how much this will cost when they need access to this money. Instead, you could set yourself a goal of how much is realistic to save for them on a monthly basis. Look into high interest accounts where you could put the money – you’ll get higher rates on accounts you agree not to access for a certain number of years.
Relevant Insurance
Many people decide to buy certain insurance products to give their families an extra layer of financial security in the future. These could be things such as income protection insurance and life insurance. The latter means that assigned family members will get a financial pay-out when the life insurance policyholder passes away. It’s important to ensure your life insurance policy is watertight if you have one, as there are sometimes issues of dispute between family members when someone passes away. To account for this, it may be beneficial to get a life insurance attorney too – keep reading here.
Assess Your Spending
Something that everyone should do from time to time is to closely analyze their spending. You may think it doesn’t really make a difference to your overall financial picture if you buy a coffee on the way to work every day, or get take out three times a week. In fact, if you were to add up the costs of some of your spending that is less necessary to your life, you’d be surprised at how much you could save. That money could be going towards your child’s education fund, or it could pay off your debts sooner.
Of course, life is for living, and you should spend money on the things you enjoy. Balance is everything. See if there are places where you could easily change your habits. Treat yourself to a coffee on the way to work on Fridays instead; bring your own the rest of the week. Perhaps cut down to one takeaway a week. Think bigger than everyday habits too. Change energy suppliers, internet providers and banks when you can save money; some companies will even pay you money to switch to them. Every time you save yourself some money, put the saved money towards your future somehow. As you see your saved money accrue, you’ll become more motivated to find a good financial balance now, while giving yourself more to look forward to in the future.