For families, the demands that everyday life brings can mean you rarely get the chance to think about your finances in as much depth as you should – especially as budgeting as a family is a lot more complicated than putting savings into another bank account at the start of every month.
Cutting down on your spending in one area isn’t going to make a drastic change, but a little reduction in costs from a number of areas of your life could make a huge difference. Here are six serious finances tips to help you and your family.
Tip 1: Make a family budget
Putting together a budget may not sound like much fun, but it’s important in helping you understand your monthly cash flow and disposable income. Break it down into the amount of money you earn after tax, the amount you’re spending on essential livings costs and the leftover amount. The amount you spend and how much you save could be one of the most important decisions you make in your financial life. Well, known websites such as Mint can make it easy for you to get started with your budget.
For example, if your weekly food shop seems to be going up and up, it’s worth drawing up a food budget, as well as planning your meals for the week so you only buy what you need.
Tip 2: Take advantage of Junior ISAs
A Junior ISA allows you to save and invest for a child under 18, tax-free. Launched in November 2018 the ISA limit is £4,260 for the tax year of 2017/18. As there is no tax on your savings, with these accounts you can see your money grow faster over the years.
Tip 3: Write a will
Nobody wants to think about what will happen when they’re no longer around, but when you have a family it’s so important to have a will prepared. It’s also worth considering how you’ll protect your assets at the end of life, and spread out your inheritance. Your family could end up acquiring probate fees, amongst other unexpected costs – so make sure you account for these when organising your money and assets for the will. Consider talking to a solicitor to find out all the costs involved and what your options are.
Tip 4: Ensure you have adequate protection
Your family savings could easily be depleted because of a medical emergency or illness that comes unexpectedly and you lose the ability to work. This is why ensuring you have adequate protection against critical illnesses, accident, hospitalisation and loss of income is important for all parents.
It’s a good idea to review your life insurance too, or amend a policy to cover the mortgage or living expenses.
Tip 5: Pay yourself first
While it’s critical to pay your bills on time, it’s even more important to pay ourselves first – setting aside a portion of your income as savings. Although it may seem insignificant or a challenge to some of you, by prioritising savings over spending, it could help cultivate your mind-set and reduce the need to buy unnecessary items.
Tip 6: Regularly review your financial plans
Once a financial plan has been set up, follow through with discipline and review it regularly every six months to a year to ensure it’s still relevant and meets your financial goals.
Give these tips a go and you will soon see how much better off your family can really be.