With inflation on the rise and budgets stretched tighter than ever, right now is the perfect time to look through your family savings and make sure they’re in order.
Whether you’re deciding if a zero deposit lease for family cars is a good choice for your budget, or if putting money in a high interest savings account would be beneficial, taking some extra time to think through your finances is always a good idea.
And often, starting to manage your family’s finances starts with putting together some solid family savings.
Family savings are crucial for ensuring financial stability and security in the long run. But many people often struggle with how to get a proper family savings plan set up.
If you want to build up your savings and improve your money management skills, try these ideas to get you started.
Why Are Family Savings Important?
People tend to categorize their savings in many different ways. And every type of savings account has a valuable purpose.
Retirement accounts, education accounts, and an emergency fund are just a few of the different types of savings accounts that a family might have in place.
In general, a family savings account is one that’s used for larger family expenses.
This could sometimes be an unexpected expense, like replacing an appliance. Or, it could be a planned expense like a family vacation.
Depending on your own situation, your family savings may combine a few different types of savings. But, having some sort of family savings is a must for ensuring your family’s financial well-being.
Assessing your Financial Situation
The first step to putting together a proper family savings plan is to assess your current financial situation
Doing this can help you identify areas where you can make improvements, and let you set goals for the future.
Knowing where you stand financially will give you the confidence to make smarter decisions about how to manage your money. You can then create a plan that will help ensure that you are making progress towards achieving your financial goals.
Calculate Your Income and Expenses
To find out what type of savings plan will work best for you, start by writing down your total monthly income.
Make sure to list all income sources, including rental income, support payments, or income from side jobs.
Then, start writing out your expenses. Start with essential spending, including housing, utilities, debt payments, and groceries.
Finally, list your non-essential expenses, which could include things like eating out and streaming services.
Having a complete list of everything you both earn and spend will help you identify areas where you can cut expenses and allocate more money towards savings.
Sett Up a Budget and Stick To It
Once you have an idea of your monthly income and expenses, you’ll be reading to create a budget that includes saving a portion of your income each month.
To make following your budget easier, consider setting up automatic withdrawals to your savings account each month.
And don’t forget to review your income and expenses every few months and adjust your budget as needed. Winter may have children’s hockey fees that summer doesn’t, for example.
Look For Ways To Minimize Expenses
One of the best things about having a budget in place is that it lets you easily see areas where you could be spending less.
This could include minimizing those take-out orders,
Check out some money saving tips to help you get started with trimming your own spending, and then make sure the extra money goes straight into your savings.
Building an Emergency Fund
While having some general family savings is a must, having an emergency fund is also an essential for ensuring your family’s financial security.
An emergency fund can be used to cover expenses in case of a job loss, a medical emergency, or other unexpected p
If you’re wondering how to get started putting together an emergency fund, try these tips:
Set An Achievable Savings Goal
Set a goal for the amount you want to save in your emergency fund, and make sure to save a portion of your income each month towards this goal.
Experts generally recommend that an emergency fund has enough money in it to cover approximately three to six months of your family ‘s expenses.
Put Money Into the Fund Monthly
Building up an emergency fund requires both discipline and consistency. Your emergency fund should be a priority in your budget.
Remember, the important thing is to ensure money goes into the fund every single month, even if you can only deposit a small amount.
Over time, you’ll be able to build your emergency fund up to the level you want.
Don’t Forget About Life Insurance
There are several affordable life insurance options that can provide your family with additional peace-of-mind in a worse-case scenario:
- Term Life Insurance: This is the most affordable type of life insurance, as it only provides coverage for a specific period of time (the “term”).
- Guaranteed Life Insurance: This type of insurance doesn’t require a medical exam, making it a better choice for individuals with pre-existing health conditions.
- Whole Life Insurance: This type of insurance provides coverage for the entirety of the policyholder’s life, with a guaranteed return and a guaranteed cash value.
- Universal Life Insurance: This is also lifelong insurance, but features flexible premiums and a potentially variable interest rate instead of a guaranteed return.
Saving money is an important part of financial planning for your family. Family savings will let you provide for yourself and your loved ones in times of need.
Besides, when you save money it also helps to reduce stress and gives you a sense of security knowing that you have a financial cushion to fall back on.
By taking the time to save now, you can ensure that your family has the resources necessary for long-term financial success.