No matter what your financial situation is right now, it’s important to take a proactive approach to your family’s financial future. By taking steps to protect your savings and investments, for example, you can safeguard your capital and ensure your family will have the resources you need in years to come.
Of course, it’s impossible to predict what the future holds, which is why planning your finances can be tricky. However, this shouldn’t prevent you from making contingency plans and taking control of your finances. If you want to ensure you, your partner, and/or your kids won’t have money worries to contend with, take a look at these six steps you can take to secure your financial future now.
1. Understand Your Financial Situation
If you haven’t examined your payslips in a while or you aren’t sure where your money goes every month, it’s time to reassess your financial situation. Until you know exactly what your income and expenses are, you won’t be able to set meaningful financial goals or make viable plans.
If your income varies, it can be tricky to establish exactly how much you’re going to make in the future. However, calculating your average income over the past two or three years can help you to gauge roughly what you earn on an annual basis.
2. Reduce Your Outgoings
Even if you have a decent amount of disposable income every month, it makes no sense to spend money unnecessarily. If you can get a better deal on your utilities or your car insurance, for example, why not make the most of the opportunity? It only takes a few seconds to complete a comparison search and you might be surprised at how much you can save.
Similarly, check what subscriptions or memberships you’re currently paying for. These often go unused and are forgotten about, which means you could be paying hundreds of dollars a year for services you never use. Cutting these costs can free up extra funds to save, invest, or spend, so it’s well worth auditing your finances and reducing your costs where you can.
3. Set Savings Goals
If possible, you should always aim to save a specific amount of your wages every month. However, saving without a specific purpose in mind can make it tempting to dip into your funds whenever you feel like it. Setting yourself savings goals will help you to stay on track and will keep you motivated to continue making contributions to your savings account.
Whether you want to buy a larger house, invest in a second property, or save up for a dream holiday, having a specific target in mind will make it much easier to stick to your budget.
4. Try Estate Planning
No-one wants to think about a time when they might not be around but deciding how your finances will be dealt with after your death is an important aspect of protecting your family’s financial future. If you don’t seek help from an estate planning law firm, it’s likely to be much harder for your loved ones to manage your financial affairs in the future.
Furthermore, failing to make arrangements will inevitably mean that your savings and assets will be subject to Estate Tax before they reach your next of kin or beneficiaries.
By making a will, placing assets or money in trust, and designated specific beneficiaries, you can limit your tax liability and ensure that your personal belongings, finances, and assets go to the right people.
5. Plan Your Retirement
While you’re working, your income serves to fund your lifestyle. Once you’ve retired, however, you’ll no longer be working and won’t, therefore, have access to this level of income. Due to this, it’s important to plan ahead and figure out how you’ll fund your living expenses and luxuries when you retire.
Many people pay into a pension throughout their adult lives, in the hope that it will enable them to live a nice lifestyle when they eventually stop working. However, don’t assume that your pension will cover all of your costs. By speaking with a professional pension adviser, you can find out exactly where your existing pensions stand and take-out additional policies or increase your contributions if you need to.
6. Purchase Life Insurance
A life insurance policy gives you peace of mind that your family will be financially supported in the future. As there are numerous different types of life insurance, it’s important to ensure you know exactly how much coverage you have and when it runs out.
Although whole-of-life insurance policies are available, these tend to require high monthly contributions. Due to this, many people choose to take out term life insurance instead. However, if you live past the term of your policy, it won’t pay out at all, so you’ll need to decide which option is best for you and your family.
Similarly, there are increasing or decreasing life insurance policies, which means the amount paid out will either increase or decrease as you get older. Depending on how old your kids are or what stage of life your partner is at, you may want to consider whether they’re likely to need more or less financial support in the future before choosing which type of policy to buy.
Getting Professional Financial Advice
Planning your family’s financial future is a big task, so don’t panic if it feels overwhelming. Furthermore, don’t rush into making major decisions when it comes to money matters. Although it’s important to begin the process of safeguarding your finances, it may be necessary to take a few weeks or months to access the information you need and come to a decision about how to manage your finances.
One of the most useful things to do during this time is to access professional financial advice. With expert input, you can determine what financial products or arrangements could suit your family. Additionally, having specialist assistance will leave you feeling confident that your finances have been safely managed and that nothing has been overlooked.