While no one can predict the future, there are actions you can take to feel more in control of your finances. Here are six meaningful things you can do to help build your confidence in your family’s financial future.
Create an Emergency Fund
Did you know that the average American household has about $8,883 in savings? That may not be enough to cover at least six months—or more—of household expenses, in case an unexpected financial emergency occurs. Creating a fund to be used for emergencies can provide a cushion against challenges when they arise.
Even putting a small amount into a separate account each month is a good place to start. Just think of how grateful and relieved you’ll feel if you ever need to use it.
Evaluate Your Life Insurance Coverage
Saving money is important, but it’s also critical to protect your family finances and feel confident that your loved ones are taken care of should the unexpected happen. If you or your spouse were to pass away, life insurance can help to replace lost income, cover the cost of outstanding obligations (like debt, college tuition, etc.), and funeral costs.
Cut Costs, Even When You Don’t Need to
Admittedly, sticking to a budget when you don’t have any foreseeable financial hardships doesn’t sound like much fun. But the best time to assess where you spend most of your money—and how much you’re willing to cut back—is when you’re doing it voluntarily.
For example, think about “cutting the cord” and opt for lower cost streaming and subscription services. And instead of buying pricey lattes, why not invest in a quality coffee maker and flavored syrups you can use at home.
Take Control of Your Credit
One of the best ways to keep your family finances in order is to reduce or eliminate debt and keep your credit in good standing. Request your credit report and fix anything that’s harming your score, like mistakes or an inconsistent payment history.
Be sure to check your credit card interest rates and call the provider to negotiate a lower annual percentage rate (APR), if possible—especially if you’ve been a long-time customer. Strive to pay more than your minimum balance each month, and avoid increasing your credit line, which can lead to racking up more debt. Another tip: Think twice before applying for credit cards at retail stores, even when they offer special discounts. Instead, aim to consolidate your spending onto one or two cards, to make it easier to track.
The less you spend per month on paying off debt, the more you can put toward savings.
Involve the Whole Family
Encourage your kids to start saving money as early as they can. Start with giving them an allowance for doing household chores or small tasks and help them consider how to spend it. When they’re older, having a part-time babysitting gig or after school job can empower them to manage their own money wisely.
Also, be open and honest with your partner when it comes to money. Talk about how you’re dividing responsibilities for existing bills and how you might handle family finances if you need to tighten the budget.
Stay Current on Maintenance and Repairs
Staying on top of maintenance and repairs for your home, car, and other belongings can prevent major expenses later. Try not to put off things like oil changes, tire rotations, or seeing why the “check engine” light is on. Keep up with home projects like annual air conditioning and furnace servicing, chimney sweeping, and gutter cleaning.
Be sure to put these tasks on a shared calendar with your partner; note who’s responsible for each one, and (gently) hold each other accountable.
With the right strategies for saving and planning ahead, your family’s financial future can look a lot brighter.