No matter how big or small your family is, laying a sound financial foundation for everyone’s future is one of the most important things you can do. Many young people enter adulthood with only a vague understanding of how to budget their money, let alone make a plan for getting through unexpected challenges that may arise. By taking a more in-depth look at the components of a successful financial plan, you can set your family on the road to economic security.
Be Prepared for the Unexpected
Accidents do happen, and, unfortunately, so do illnesses and crimes. One of the easiest and most effective ways to protect your loved ones and your property is by purchasing the right insurance policies for your particular circumstances. Begin by researching the options and evaluating a variety of insurance quotes. Depending on your family and its needs, you may need some or all of the various types of insurance available, including automobile, home, health, and business.
While you may be tempted to save money in the short run by skipping some coverage, keep in mind that the unexpected can happen at any moment, and the consequences could be catastrophic if you’re not properly prepared.
Develop a Shared Financial Strategy
Exactly how your family will manage its day-to-day finances is something you’ll need to discuss openly so that everyone understands their individual responsibilities. In households with more than one adult, you’ll need to decide whether to pool all resources into joint bank accounts or keep separate ones. Some families find a happy medium by maintaining one joint account from which shared bills like house payments, utilities, and groceries are paid, along with separate accounts in which each adult maintains their own personal expenditures.
There is no one-size-fits-all when it comes to banking and bill-paying, so feel free to come up with creative methods that work for you. The most important thing to keep in mind is to set clear guidelines and consistently follow them.
Take Taxes Into Account
No one likes to do it, but everybody has to. Pay taxes that is. If you’re married, you and your spouse will need to decide whether you’ll file your taxes jointly or separately. For most couples, filing jointly is easier and more advantageous financially, but there are exceptions. Weigh the pros and cons carefully and if in doubt, consult a tax professional.
If someone in your family operates a business, even if it’s a simple sole proprietorship operated out of the home, there are tax consequences that you’ll need to understand and obey.
Look Ahead to Retirement
It may be hard to imagine right now, but you will one day be physically and mentally ready to retire from full-time work. But will you be financially prepared? It may seem like a sacrifice to set aside money for retirement right now, but it’s one of the smartest things you can do to protect yourself and your family. You want to ensure that you can live comfortably and independently in your older years without burdening your children or other loved ones. The time to prepare for that future is right now, so your savings can grow over time.
Teach Your Children Well
If you have children in the home, don’t leave them out of your financial discussions and planning. Preparing children to be responsible adults is one of a parent’s primary responsibilities and teaching about money management is one of the best ways to accomplish that. Depending on the children’s ages, they can participate in discussions about the family spending plan, contribute a portion of their allowance towards a common goal, earn money from babysitting or a paper route, open their own bank account, or even try their hand at investing in stocks that interest them.
When it comes to your family’s finances, every detail matters. Think through the components that make up a solid foundation, discuss it openly, agree to a plan, and work toward it together. You’ll soon know the serenity that comes from knowing your family has the financial resources to weather an unexpected storm.