Key Financial Considerations For Every Family

Friday, April 17, 2020

Money is one of the most common sources of anxiety among adults in the US. The truth is that financial worries affect most of us at some point in our lives. The good news is that there are ways of remedying problems and taking control of your finances. If you hold the purse strings in your household, here are some key considerations to bear in mind and some tips to help you stay afloat.

Key financial considerations for your family

Balancing the books can be a daunting challenge when you have children and it seems like you have payments going out of your account on a daily basis. Running a household isn’t easy, and there are several considerations you have to take on board to manage your money effectively and try and avoid getting into difficulty. These include:

Rent and mortgage payments

Most of us either own a property or pay rent to a landlord or landlady. For the majority of people, rent and mortgage payments account for a substantial portion of their monthly income. Before you take out a mortgage or sign a rental agreement, it’s essential to ensure that you can cover the repayments. If you stretch yourself too far, there’s a risk of running into trouble, especially if your income drops. If you are paying rent or you have a mortgage, prioritize these payments in your monthly budget. If you miss repayments, or you’re late transferring your rent money, this could impact your credit rating. If you can’t keep up, or you find yourself in a situation where you’re struggling to cover a payment one month, contact your mortgage provider before the payment date. It may be possible to find a solution. 

Household costs and utilities

Managing a household is expensive. On top of your rent or mortgage, you’ll also pay bills for electricity, gas and water, as well as forking out for food and transport. If your bills are too high, and you’re overspending on a regular basis, there are ways of bringing costs down and saving money. The first thing to do is analyze where your funds are going. You can reduce spending on energy by lowering consumption and considering switching suppliers if this is an option open to you. When it comes to commuting costs, try and save by sharing lifts with colleagues, running or cycling to work and working from home more often. To lower food bills, plan a weekly menu and write a list, use coupons and consider shopping online. Buying groceries online enables you to keep a running total, and it can also help you avoid succumbing to tempting promotions that make you spend more.  

Insurance and protection

The average adult in the US spends $5,000 per year on health insurance alone. If you add vehicle, home and pet insurance, investing in cover for your household can swallow up a huge proportion of your salary. Insurance is essential, but there are ways of cutting costs. One of the most beneficial changes you can make is researching your options when your policies are due for renewal. It’s easy to roll your plan over, but you could be paying over the odds. Instead of automatically renewing policies, spend a few minutes comparing prices online. Comparison sites enable you to check multiple providers and explore an array of options before you buy. As well as taking out insurance for your home, your car and your health, it’s a good idea to think about investing in life insurance. This is particularly beneficial if you have children or a partner, you own property, or you have a business in your name. Working with experts like those from Mile High Estate Planning can also help you shield your assets and ensure that your family is protected if anything happens to you or your partner. It can be sobering to think about the future in this way, but it is critical to take these steps as soon as possible if you have valuable possessions or you’re a parent or a homeowner. 

Paying off debts

US household debt topped $14 trillion in 2019. It’s very common for adults to be in debt, but there are different scenarios that can unfold. If you’re paying back a loan or a mortgage, for example, and you’re on track and able to cover repayments, there’s nothing to worry about. As long as you keep up with the schedule, your credit score will remain high. The difficulties begin when you have debts that you can’t pay back or you start to borrow more and more every year. If you’re missing payments, you have credit card or store card debts and you can’t afford to pay bills, it’s important to try and improve the situation as soon as possible. The more you borrow, the harder it will be to get back into the black. Seek advice from financial experts and prioritize your debts. If you’re paying out hundreds of dollars in interest or penalty charges every year, try and reduce these debts first. It may be possible to take out a loan to pay off all your existing debts and start from scratch with one single payment to meet each month. A financial adviser can help you explore options that are suitable for you. 

Setting up an emergency fund

The situation we find ourselves in at the moment is a clear indicator of the unpredictability of life. A few months ago, we had never heard of COVID-19, and today, millions of people are locked down and staying at home. The reality is that we never really know what is around the corner, and this is why planning ahead is so beneficial. If you can afford to save a small amount each month and set up an emergency fund, this could prevent financial stress if you do need cash at short notice. Your pot could cover medical fees, home repairs or treatment for your pet, or it could help to bridge the gap if your income drops or you lose your job. 

Keeping your head above water is not easy when you’ve got bills to pay, children to raise and a home to run. Breaking down expenses, drawing up a budget, setting up savings accounts and planning for the future can all help to keep stress at bay and give you peace of mind.

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