8 Important Financial Planning Tips to Keep Your Family Protected

Only 30% of families in the United States have a long-term plan for their finances. Having financial plans not only helps you save money and plan for your future, but it will help you have financial security when you have unexpected expenses or crises come up.

Are you interested in learning more about financial planning for your family? Keep reading these 8 financing and budgeting tips to help you improve family financials. 

Build an Emergency Fund

The first step to financial security is to create an emergency fund. You never know when an unexpected expense is going to come up. In fact, a study shows that close to 40% of Americans would have a difficult time paying for an unexpected expense of only $400.

Having a good emergency fund will protect you when you experience an unexpected crisis. A good rule of thumb is to slowly save up and add to your emergency fund.

First, save up enough to pay for a month of living. Then, save for three months and up to six months of the cost of living. 

Pay Off and Avoid Debt

The number one tip for debt is to avoid it. This is a general rule, and there are exceptions.

Some examples of good debt include buying a home, getting your education, or starting a business. These types of debt are good because they are seen as an investment. However, it is always good to avoid credit card debt.

With high interest rates,  you will find yourself making bigger payments and losing more money in the long run. If you have successfully paid off and avoided debt, you will be able to save more by saving the money that was previously used to pay off your debt.

Stick to a Budget, No Matter What

Another financial planning tip to protect your family is to stick to a budget, no matter what. Creating and sticking to a budget can be hard, but is definitely possible!

Some categories for your budget should be groceries, rent or mortgage payments, utilities, insurance, emergency fund, miscellaneous expenses, savings, and any other monthly payments you make.

Having a miscellaneous category will pay for things that come up that don’t necessarily fit into another category of your budget. When you make categories for every type of expense, you will find it easier to save money and meet your financial goals!

Another tip for your budget is to add in a category for “fun money.” This is a certain amount of money that you can spend each month, no questions asked! You can spend it on eating out, shopping, or anything else.

By including this in your budget, you will be less likely to overspend on things you don’t really need. 

Open Several Savings Accounts

Another helpful financial planning tip is to have several savings accounts, each with a different purpose. This allows you to set aside money for each of your savings goals.

You may have long-term savings for retirement or for a large purchase, like a house. You may also want to open an account for short-term savings, like saving up for a vacation. Having multiple savings accounts will make it easier for you to track your money and grow your wealth

Improve Your Credit Score

There are many reasons why you would want to improve your credit score. First, you can get lower interest rates when on your credit cards and loans. This will help you pay off debt faster and will help you save more money. It will also give you a better chance for loan approval!

If you need to borrow money for a home or a large payment, having a good credit score will make that process much easier. 

There are many tips that will help you improve your credit score. Your FICO credit score is calculated by looking at your payment history, how much you owe, how long you have had your credit, and more.

One of the best things you can do to improve your credit score is to consistently pay your bills on time, or even early!

Create a Will

You never know how much time you have left. This is why it is important to create a will. This will not only help split up your estate after you pass, but it will also protect your family. It will give them your assets and will make sure they are properly taken care of in the event of early death. 

Buy Life Insurance

Another way to protect your family if you pass away unexpectedly is to have enough life insurance. If you have people that depend on your income, life insurance is a necessary purchase.

Having life insurance will protect your family, will give them enough money to live on while they get back on their feet, and it will help your family adjust to their new life. 

Keep Important Documents Safe

Another great financial planning tip is to keep all of your important documents in a designated spot. Keeping your documents safe will make it easy for family members to access them in case of an emergency and it will also help you protect your important financial information. 

Learn More About Financial Planning Today!

If you want to protect your family, it is important to have a financial plan in place. If you want to learn more about financial planning, family investments, and more, Mortage Winners can help!

Contact us today to learn more about finding the right financial solutions for your family.