Your family’s financial future depends on how well you prepare for it today. Failure to make the necessary preparations can put your loved ones at risk of not being able to pay for basic necessities, not being able to pursue the educational path they wish to pursue, and being restricted with what opportunities they are presented within life and your career. Fortunately, it doesn’t take a lot of time or effort to prepare for your family’s financial future. Here are six ways to do just that.
Set Specific Goals
It’s overused but nevertheless an important first step. Setting financial goals gives you structure. Based on the target retirement income you set, for instance, you can then make appropriate adjustments with your current job. You may find that your retirement goal 10 or 20 years from now is too high to reach given your current salary. Perhaps where you plan to retire has a cheaper cost of living than what you are used to, so you can readjust the savings amount and retire earlier.
Work Out a Clear Path to Get There
If you want to save $20,000 to help with your child’s college or $10,000 for his/her wedding, figure out how much you need to save right now and for how long. You can easily determine how much money you need to be saving per month in order to reach a predetermined goal. For instance, with a $10,000 goal, it will take you close to 20 years to hit the target if you allocate $25 to your savings account each month.
Consider Estate Planning
Estate planning is something that you should incorporate into your financial planning if you have a family and/or assets. Estate planning answers the question – what happens to your assets and family when you die? Depending on the number of assets you have, your family size, and your state of residence, you may or may not need an estate plan. Other situations may call for a simple and more basic will to be drafted. Perhaps the key benefit of an estate plan is its ability to reduce the costs and time delays of a probate. You can learn more about how exactly estate planning works and what its benefits are by consulting an estate planning law firm Los Angeles, or a local law firm.
Pay Off Your Debt
Your family simply cannot start saving money while carrying debt. Any leftover money from your monthly income is going to be sucked into paying interest on your outstanding loans and credit cards. Pay off debt in the order of highest to lowest interest. Student loan debt is slightly different from other credit products since you only need to make payments if you are making above a specific amount on a monthly or yearly basis. Student debt also doesn’t impact your credit score, so prioritize debt that does.
Make Some Long-Term Bets
Invest in financial assets that are set to consistently grow over a long period of time, say 20-30 years from now. It may be tempting to buy into altcoins, like SHIB or AMP, or penny stocks and hope that its price gets pumped soon for a 1,000 percent return overnight, but these types of bets are risky and fail more times than they succeed. Go for high-interest cash savings accounts, growth and value stocks, high-interest bonds, and ETFs. Real estate, precious metals, and commodities are also good investment options for consistent capital appreciation.
Educate Your Children
Financial education is not something that your children will learn from school, yet these are skills that play an integral role in their adult life. Teach your kids about saving and investing and the tools and techniques used to conduct these two activities. At an early age, for instance, teach your kids how to track the family’s spending. Use a spreadsheet, budgeting application, or a piece of pen and paper to list and categorize monthly expenses.
Involve your entire family when planning for your financial future. It’s a team effort and every decision you make should reflect the goals you and your spouse and children are trying to get to. By being forward with your financial successes, concerns, and ambitions, you can course-correct whenever needed and stay on the right path.