It’s hard for families to keep up with what their neighbors are doing. Where they live, what they drive, and how they vacation piles up. When the cash runs out you turn to credit cards. Before anything can be done, the family’s finances are out of control.
Today, almost two-thirds of Americans believe financial education is needed at the high school level to avoid these types of situations. Not only does it help stem potential issues but it also stabilizes personal budgets. As a result, money works for the family instead of vice-versa.
As part of that financial education, here are 5 tips to elevate your family finances.
1. Work Together
Getting a hold on family finances is a team effort. Budgets, investments, and cost-cutting measures only work if everyone is on the same page. If most of you follow through but one person doesn’t know their limits, then you’ll all remain stagnant. Everyone needs to be on the same page, even if some of the decisions are uncomfortable.
2. Be Honest About Your Finances
Telling your family members “Everything is okay” when it isn’t doesn’t help anyone. In fact, it harms your trust among them. Especially when an emergency occurs that you can’t cover.
On the other hand, if you’re always honest with your spouse and children, then situations aren’t as difficult as they seem. In fact, they should be willing to assist to get things back on track. This includes working together to set up a budget that pays bills and leaves something extra for everyone.
3. Speak With A Professional
Sometimes it’s not how much you spend but what to do with the amount you have. Instead of your money working for you through investments it sits in a bank account. In this case, you need to find a professional in your area by searching “financial advisor in Las Vegas” or your own locale to start the process.
Plenty of subject matter experts on money exist at places like SkyOak. Their responsibility is to examine your existing funds, learn how you spend them and put together a plan to make your money grow. How quickly this happens depends on your timeframe. In other words, they’ll recommend aggressive investments for a fast turnaround and slower ones if you want a long-term solution.
4. Purchase Life Insurance
One thing an advisor might suggest is to purchase a life insurance policy. This doesn’t represent a shorten lifespan. Rather, it’s an investment toward your family’s security once you pass on.
The policy’s value depends on current and future financial estimates. Normally, the value of your life insurance should be about 10 times what you currently make. On the other hand, if you already have a million dollars or more in liquid and investment assets, then a smaller policy is required.
5. Jumpstart Savings For Your Children And Retirement
Preparation is important to elevate your family’s finances. Along with life insurance, investment for future expenses is important. Two ways to make this happen are through a college education fund and 401(k) or IRA.
The first investment ensures your children’s post-secondary studies are paid for. Thus, they don’t start their adult lives off with student loan debt. Additionally, it takes the pressure off of them while they’re in college. They don’t have to worry about how the next semester will be paid for.
The second investment covers the financial future of you and your spouse. With people living longer, the number of expenses related to care and other items increases. With a properly funded IRA or 401(k) program, you have the means to address these items. Similarly to your children, the pressure to work well into your advanced adult years is minimized.
In the end, there’s an overall theme to the above tips to elevate your family finances. You can’t be fearful of money. If you let this emotion take over, then you’ll constantly struggle to come up with the necessary funds time after time.
Avoid this by taking the necessary steps today instead of tomorrow. Furthermore, know that what you do right now, though it’s hard, will allow your family to reap the rewards as you all grow into smart financial leaders.