Getting your family finances in order is a great thing but most of us do not do it until we are forced to by a life event such as the birth of a baby, an upcoming wedding, financial audit, divorce or a natural disaster. You can see our family is productive because of tips like these. Fortunately, getting your family finances in order in 2017 is not a difficult task.
Here are simple tips to help you.
- Commit yourself
The first thing that you should do is commit yourself to get your finances in order and follow through.
- Request for a credit report
Most people are not concerned with their credit report until they are denied credit. Since your credit history plays a major role in so many areas, you should review your credit report at least once a year.
Upon receiving the report, thoroughly look for any mistakes and if there are contains any, contact the credit bureau to have them corrected. This way, you will qualify for a high limit when need be.
- Create a budget and stick to it
Though difficult to stick to, having a budget is a vital step into getting your finances in order. In notebook, write down all your fixed monthly expenses as well as the non fixed expenses such as entertainment, meals out, clothing and other flexible purchases. This helps you to understand where your money goes and where you can cut back.
After making the budget, be sure to stick to it. Every time you purchase something, write it down including the cost then at the end of the month, compare your actual spending with your budget and see where you may have gotten off track.
- Reduce your debt
Another difficult yet important step to getting your family finances in order is consolidating your debts and paying them. Transfer the balances to a single card with low annual percentage rate (APRs) to make it easy to track the debt. Destroy the other credit cards to prevent the temptation of using them and try to pay at least double the minimum amount plus the finances charge every month.
Use debit cards or cash to make all purchases and if you do not have money, then do not buy it.
- Set Up an Emergency Fund
Before you begin worrying about investments and retirement plans, you should first have an emergency fund. The rule of thumb for savings is to have at least three months’ worth of cash for an emergency fund but with the tight economic times, it can be hard to do.
If you are short on cash, try setting aside every five dollar you get into box or even emptying all the change in ajar at the end of the day. Better yet, open a special account and write yourself a check of about $50 every time you get paid. The money will add up over time and will come in handy during emergencies.
- Analyze your insurance coverage
Disasters like hurricanes, tornadoes, floods and fires can strike any time. Therefore, it is important to ensure you have renters insurance if you rent or homeowners insurance if you own a home.
Life insurance is also great as it ensures your debts are covered in case anything happens to you.
- Find a financial mentor
Money management is challenging but a good financial mentor will guide you and help you make smart financial decisions.
He or she will analyse your budget and spot leaks where you are spending more money than you should, suggest the right financial steps to take such as how much of your income to invest, how to save for your child’s college education and how much you will need for retirement as well as inspire you.
A financial mentor should be doing well financially. Therefore, by looking at his finances, you will feel inspired and with his guidance, some day, you will be doing well financially as well.
- Make a Will
Making a will is especially important if you have children. It helps to distribute your assets as well as prevent dispute if you pass on.
If not a will, you can draw up a list of all your physical properties including cars, home, jewelry and the non physical assets such as policies and bank accounts as well as debts then select a responsible administrator who will make all decisions on your behalf after you pass on.