Start Establishing a Bright Future for Your Family with These Money Management Basics
There is so much freedom that comes with having money, managing it well, and setting yourself up for success. Parents, in particular, have the added desire and responsibility to make sure the needs of their children are met and that they will be taken care of in the event of an emergency.
So how do you get started? Follow the simple steps below and you will be well on your way to success.
Step 1: Budget
The first essential step in managing your finances is establishing a budget. Budgets will give you a clear picture of all your income and expenses, and it will show you what you have left to work with. If you have any areas where you overspend, you will be able to pinpoint the areas and plan how to manage those expenses. Most importantly, a budget will show you where you can cut expenses, reduce overspending and save.
How often should you budget? At least once a month. Mid-month — or more — you should take a look at your budget, make sure you are staying on track, and tweak it as needed.
Step 2: Save
Saving is the key to succeeding financially. Building up an emergency fund should be a top priority. Start with the goal of maintaining $1,000 in your bank account consistently, and then save enough for at least three to six months of expenses, in the event you stop having a steady income. This will not only ensure you have coverage in case of an emergency, but it will also give you the peace of mind that your family is taken care of.
Step 3: Plan for the Unexpected
You don’t drive on the road without car insurance, you don’t live in a flood zone without flood insurance, you don’t rent without renters insurance, and you don’t have a home without home insurance. Therefore, you shouldn’t do life without the following insurance plans:
- Life insurance: term life insurance is exactly what you need to ensure that your family’s needs are covered in the event something happens to you. These needs can include health care costs and final expenses. Use an online calculator to estimate your everyday policy rates, and shop around.
- Long-term disability insurance: these plans will ensure that you and your family have a percentage of your income in the event that you are unable to work for over a year.
- Umbrella insurance: most auto insurance policies have a cap and don’t cover the worst-case scenario. Imagine an accident where the other car involved is a classic car full of five attorneys — the umbrella insurance policy will cover all the excess claims.
Step 4: Invest in the Future
After you have the worst-case scenarios covered, it’s time to invest in the future. If your company offers a 401(k), take full advantage of the maximum your company matches. Open an IRA as soon as possible, and make regular contributions. Investing in your retirement not only ensures your future is secure, but it will also prevent your children from having to contribute when the time comes.
Furthermore, invest in your child’s future. College savings plans are worth the research. These tax-free accounts can be used for qualified schools nationwide. Many find that college savings plans help them provide for their children’s future, and they work because you can’t tap into the account without tax consequences.
Step 5: Become a Sought After Business Asset
One of the most valuable things you can add to your financial portfolio is an MBA. The MBA is a proven pathway to a
high-level career in numerous business disciplines. It can also provide a significant salary boost for your family that can provide financial security for the rest of your life. A few other benefits include the growth of your professional network, a focus on leadership skills, and increased world perspectives that can help inspire your family for years to come.
Money management may not be the most fun topic to think about, but it’s essential for every family, and it doesn’t have to be overwhelming. Begin by learning the ropes of budgeting, and start saving today. Also, explore all the types of insurance you may need, and look into the various options for investing in your family’s future. Before long, you’ll be growing your wealth and sleeping soundly at night.
Article Written by Momsbeyond's guest writer, Josh Moore.
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