Diaries Magazine

Family Finance Overhaul : 6 Things You Can Do To Be Better Off in 2020

Posted on the 03 September 2020 by Alex_bumptobaby @bumptobaby_blog

Got more money than you know what to do with? No? Well, you are not alone. In fact, even if you are comfortably well off, proper money management is essential. Otherwise, things can go down the toilet pretty quickly. With that in mind, whether you want more in your pocket at the end of each month or want to prepare for your children's future, overhauling your finances is vital. A topic you can read all about below. Family Finance Overhaul : 6 Things You Can Do To Be Better Off in 2020

It's OK to put yourself first. You may think that it's all about saving for your kids' future when it comes to overhauling your family finances. Of course, that is a part of it, but it's also important to realize that you will be doing your children a favor if you take care of your own financial need first. After all, who will end up picking up the bill in your old age if you cannot? Your children, of course. With that in mind, it's vital that you consider what your plan for retirement is. Do you have a nest egg that you can fall back on or a pension that will give you enough money a week to live? Do you want to add to your state pension by opening a private scheme? 

Additionally, it's wise to consider the state of your finances right now. This is because it's tough to put money away for the future if you are crippled with debt. In fact, by paying off your debt as soon as possible, you will be doing your future self a favour. The reason being that the shorter amount of time you hold debt, the less interest you will pay. Something that means you will have more money available in the future. Set clear future goals  Once you have dealt with your own personal situation, you can begin to consider what you want for your family. Of course, this means imagining the standard of living, activities, and possessions that you want for your family in the future. This means that now is the time to consider if you wish to buy your kids' a car when they turn 17 and pay for driving lessons or if you want to support them with accommodation and tuition fees if they go to university. It's even the right time to think about if you wish to provide a deposit for them so they can get on the property ladder. In fact, considering what your end goals are is a vital step in a family finance overhaul, as it allows you to create a fixed point to work backward from. That is, if you know where you are going, it's much easier to break down the journey in manageable steps to get there. Go debt free Now you have decided where you want to be with your family finances in the future, it's time to work out how to get there effectively. Of course, for most people, this means not only planning smaller, shorter, and medium-term financial goals but also getting out of debt. Being debt-free is essential to good family financial planning. The reason is that it costs you additional money apart from the among that you owe to be in debt. (The fees in the form of interest you pay to your lender for the privilege of borrowing the money.)Fortunately, getting out of debt is possible. In fact, many people choose to use proven strategies like these Debt to Success System - DTSS Membership Programs to help them navigate their way to being debt-free. The advantage of this being that they are provided with clear steps to follow while also paying less per month. Something that not only helps to improve their standard of living immediately but also a much better debt-to-income ratio. Educate yourself on the legal aspects of financial planning Good financial planning is not just a matter of squirreling away every last penny. Instead, it also includes understanding the laws around inheritance and your estate. This is because by grasping what you are allowed to do legally in the UK concerning your estate, you will be in a much better position to plan your finances. Also, you will be able to maximize the amount available to your family in the future. To that end, remember that a single person can currently leave up to £325k without the recipients having to pay tax on their inheritance. (Which is a whopping 40%). Something that will have a bearing on any amount you leave to your children. In particular, it is well worth working out if leaving over this amount will benefit them financially or be detrimental. It is also worth knowing that the amount you can leave as an inheritance is double as a couple. Therefore, if you follow the correct procedure, you will provide an inheritance up to £650 before those receiving it get taxed. Create a budgetOnce you have your long term financial goal sorted out, it's time to consider some more short term planning. Of course, the cornerstone of any short term financial planning is a budget. Although, up until this point, you may have had some varying success with using one. The good news is that you don't have to have a degree in economics to construct and use a budget successfully. In fact, by budgeting realistically, you can simplify your final life and make it much more likely that you will meet your long term financial goals. To that end, you can choose from two options here. The first is to use a budgeting app. One that provides you with a clear visual breakdown of where your money is going is best, as this can make it easier to adjust your spending as the month progresses. Additionally, with an app, you will always have access to the information you need before making a spending decision. Something that can help you to regulate your outgoings better each month. The second option is a bit more old school, but still very useful. It creates a spreadsheet in Excel or Google Sheets and keeps track of your spending that way. Of course, you can also access these on your phone on the move if you want. However, they don't have such a friendly UI as many of the apps. However, spreadsheets can work exceptionally well because they encourage us to sit down a review / keep track of our spending. Something that makes us more mindful of where our money is going and how much we have left. Be savings savvyThe step between paying off your debts and achieving your long term family financial goal is saving. However, it is important not to begin this until your debts are cleared. This is because your money is nearly always out to better use by reducing any interest payments. In a similar way to correctly understanding how inheritances work, it is also vital that you educate yourself on the best and most effective way to save money for the future. For example, a saving account is good, but an ISA is usually better as it allows you to save a certain amount as a tax-free sum. If you want your money to work hard for your future, it may be worth considering investing it rather than only saving. You can expect an average return of around 9% on the stock market over the long term. An amount much higher than most interest rates on saving accounts. Of course, unlike saving accounts, the value of your investment can go down and up. Additionally, you have to be prepared to put your money in for the long haul if you want to invest successfully. 

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