- By Emma Andrews
- Posted September 23, 2020
What Every Family Financial Plan Should Revolve Around
Having a financial plan for your family is a smart way to help make sure your family’s finances are in order. Different families have different financial needs, so each plan will be unique. That said, there are some things that every family’s financial plan should focus on for better financial stability.
Staying Out of Debt
Avoiding accruing debt is one of the best things you can do to protect your family’s financial security. The simplest way to avoid debt is to live within your means and avoid spending money you don’t have. Creating a family budget is a good way to get a feel for what your expenses are like compared to your income. Ideally, your income exceeds your expenses so you have some wiggle room. If your expenses exceed your income, it’s time to start looking for ways to reduce them. Alternatively, you can find ways to increase your income to better match your expenses.
An Emergency Fund
Emergencies can strike at any time. This year has brought into sharp relief how important it is to have an emergency fund. There are many unexpected emergencies that extra savings can help you cover. Of course, there is the question of how much you should have in your emergency savings fund. A common recommendation is to have the amount you would need to cover expenses for anywhere from three to six months. If you’re working on building up your fund, take a look at your budget and see how much you can afford to save from each paycheck. It will take time to build up, but the added security it can provide your family is worth the effort.
Paying Off Debt
It’s almost impossible to avoid having some level of debt these days. Mortgages, car payments, and credit cards are all a normal part of life. They can be helpful when it comes to building credit, and having a place to live and a way to get around is important too. Having debt can be stressful though, so it’s important to take steps to cope with it. If you do have debt, paying it off is a necessary step towards financial stability. Be sure to include it in your family’s financial plan.
Every family’s financial plan should focus on making sure that family finances are structured in a way that promotes financial stability. Design your plan to help you stay out of debt, create an emergency fund, and pay off any existing debt that you have. Regardless of your family’s financial situation, these are some things you should include in your plan.
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