Let’s face it – you want financial freedom just as much as the next person. But why? Why do you want to cut down your debt and raise your savings account balance? I’m willing to bet one of your main motivating factors is stability for your family.
When I only had myself to think about, most of my money went towards eating out, concert tickets and clothes. Even when I got married, my husband and I still splurged on expensive dinners and vacations.
The minute I found out we would welcome a baby into the home? Well, I suddenly had a new attitude towards careless spending. Knowing you are one of the sole providers for a mini human is quite a wake-up call.
Even if you don’t have children, you might someday. Or maybe you won’t. But you do have people in your life you care about, so it’s in your best interests (and theirs) to get your finances into good shape and keep them there.
Here are six guidelines to help you assess your current state of affairs and make any necessary changes.
Don’t Scrimp on Insurance
“I’m young” or “I’m healthy,” are common defenses against purchasing a life insurance policy. Neither excuse is valid. Accidents happen each and every day. Even if you aren’t deep in student loan or consumer debt, you still have to think about paying for your burial costs. The average cost of a funeral runs to almost $10,000.
If, heaven forbid, something happened to you, do you want to inflict a financial hardship on your parents, siblings or relatives?
Only 62 percent of consumers have life insurance, but you can begin turning that statistic around.
Depending on the state of your health, your age, and how much coverage you need to pay your debts and provide for your dependents, you might only have to part with a few dollars per month. Use this coverage calculator to estimate your annual policy needs.
Construct Short and Long-Term Budgets
Once you have adequate life insurance coverage to guard your family against unexpected expenses, take stock of your immediate financial situations.
Do you have too little money coming in to cover all of your bills? You have two options: make more money or cut down on your monthly expenses.
There are simple ways to make money fast to help you beef up your cash flow right away, but you should also consider your long-term plans. Where do you want to be financially one year from now? Five years from now? A decade from now? Don’t shrink away from the hard questions. Instead list your dreams and work towards making it a reality.
Consider Debt Consolidation
If one of the major obstacles blocking your short and long-term budget goals is debt, you might want to think about consolidating your high interest bills into a manageable monthly payment.
You will have an overall lower monthly payment and the interest might qualify as tax deductible. Instead of fumbling through a large stack of creditor statements, you can set up one automatic monthly deduction from your checking account.
Before you know it, your debt will be far behind in the rearview mirror and you can put your funds towards something more productive.
Take Care of Your Future Aging Self
Speaking of productivity, what are you doing right now to prepare for a time when you will no longer be able, or want, to work? The earlier in life you start saving the better, thanks to the incredible power of compound interest.
Explore the current options provided by your employer. Do they match a certain percentage of funds saved through your 401(k)? You can also save up to $5,000 pre-tax dollars in a Roth IRA.
Again, automatic deductions from your paycheck will assist in holding you accountable to your savings goals.
Retirement might seem a long way off – and it is – but each dollar you save now will only increase your standard of living when you decide to wrap up your career. Even in old age, you could still learn how to sell on Craigslist for extra cash if needed.
Write a Detailed Will
Again, the thought of a will might make your skin crawl. You’ll be alive for decades and decades to come, what’s the rush? While there are multiple myths surrounding will creation, one of the biggest lies is that you don’t need one yet.
Think about it this way: you don’t have any control over whether you will die tomorrow, but don’t you want control over how your assets are handled if you do?
You might be surprised to know that your spouse doesn’t automatically assume your possessions, but it all depends on the laws of your state. You need an experienced estate lawyer to provide information and guidance.
Set an Example of Financial Health
One of the best things you can do to keep your family financially healthy is to lead by example. Don’t let your children grow up not knowing how to correctly handle their hard-earned money.
Once you have your own finances in order, teach your kids about what it means to be financially responsible.
Co-sign a savings account with them and train them to set aside money for the future. The habits you ingrain in childhood will last throughout their lives and may assist in protecting them from serious financial problems.
Safeguard the future of you and your family by instituting these six steps and you’ll have a more relaxed, peaceful outlook on the future.