Ok, be honest. When was the last time that you thought about your financial health? We try and act like money isn’t that important but it has a huge impact on pretty much all areas of our lives. When you have a family, there is a lot going on, and it’s important to look at what’s best for you all. Most of the time that means making sure that you can afford to live and eat! But not only that, it also means looking at how you want to live your life.
It kind of goes without saying that when you don’t have money troubles, there is a lot less stress in your life. Less stress is always a good thing to aim for. In this article, we’ll look at the things that you may be doing that are hurting your family’s financial health.
1) Not Having a Monthly Budget
If you don’t have a monthly budget then your money could be disappearing into a black hole. You could be spending way more money than you realize in certain areas, and you could even be spending money on things that you don’t use anymore. Having a budget may sound really restrictive like you can’t ever have any fun and do what you want. In fact, the opposite is true. A budget helps you to put money towards the things that truly matter to you, and pay the bills of course.
When it comes to budgeting, keep it simple. Write down your income, and then all of your expenses – so your bills, and variable expenses such as groceries, gas, etc. Using a simple budget template or an app like Mint is the best way to make this a monthly habit.
Try and aim to a zero-based budget, which is where you will be allocating all of your money so that there isn’t any money floating around, unaccounted for. You can leave a buffer in there if you are worried about unexpected transactions, but don’t spend it!
2) Having Little Or No Emergency Fund
Would you be ok if your car broke down and needed some work doing today? Or how about if your fridge stopped working and ruined all of the food?
I know that we like to think these things won’t happen, but unfortunately, they do. And they all seem to come at once too. If you have little or no emergency fund, you aren’t going to be prepared when things start to break or go wrong. Usually, this means that you’re going to have to do something like put it on a credit card. This is how the cycle of debt continues on and on.
How much you put in your emergency fund is up to you, but a lot of people recommend starting with $1,000 and saving up to a few months living expenses in case you lose your job.
3) Carrying High-Interest Debt
When you have debt, the money that you’re earning that is actually no longer yours. You instead have to to pay someone else for something that you have purchased in the past. When you have high-interest debt, that means that you are paying out way more than you need to on interest. Some interest rates are enormous, and you’ll end up paying out huge amounts to your lenders. The best thing to do is to see if you can lower those interest rates. The first port of call should be to your current lenders to ask them if you can reduce interest rates. There are also balance transfers with a 0% interest rate that can help you save money but you will have to commit to paying your debt off before the interest rate goes up.
4) You Don’t Look at the Big Picture
It’s not just about the money that you have in your wallet right now, but your big overall financial picture. There are other parts of your finances including net worth, retirement savings, and life insurance that are important to look at to ensure that you are doing well and are going to be ok in the future.
Do you know what your net worth is? Net worth is a way that you can look at how you stand financially at a quick glance.Net worth is calculated by looking at your assets and subtracting your liabilities. Assets would include things like your car, and liabilities would include things like debts.If you are a bit unsure, so for example if you have a mortgage on your house, it’s still pretty simple to work out. Say your house is worth $100,000 and you have a mortgage of $80,000 on it. You would do $100,000 – $80,000 = $20,000. The final sum ($20,000) is what you would write down as your asset.
Have you thought about retirement? I know, it seems like a long way away but are you prepared? The last thing that we want to happen is to get into retirement and find out that you don’t have enough money to live. Make sure that you are maxing out your retirement accounts or at least paying into them as much as you are able to.
It’s one of those things that sounds a bit morbid, but it’s 100% necessary. If something were to happen to you, would your family be ok? Life insurance doesn’t have to be really costly to work well for you. Take a look at the options that are available and make sure you are fully covered. This is an expense that everyone should have, just in case.
5) Not Planning for the Future
It can be all too easy to look at what’s happening right here and right now, without thinking too much about the future. Studies have shown that we actually think about our future self as a completely different person, so it’s no wonder we find it hard to plan for the future.
It’s important to plan for the future so that you have a definitive plan of action to get there. If you don’t plan, then you won’t achieve any goals and time has gone. Sit down with your partner and figure out where you want to be in a few years time. Discuss the things that are important to you both, and write them down. When you know what you want, make a plan of the steps that you have to take in order to get there.
We all get caught up in our day-to-day lives but sitting down and having a good hard look at our finances is important. Money affects a lot of things in our life, and as we work hard for it, it should be working hard for us too. It doesn’t need to be really complicated. There are simple things that you can do to ensure your family has strong financial health.