Proactively planning ahead is one of the best ways to ensure a secure financial future for you and your family. Best of all, you don’t need magic tricks, a stroke of luck, or some kind of genius-level of intuition to do it.
In fact, all it takes to become financially secure is a little planning and some smart money habits like tracking finances, paying off debt, and reducing expenses. So, with that in mind, here are some practical tips you can do to check the pulse of your family’s financial situation.
1. Track spending
If you’re not tracking where you’re spending your money, you’ll have an inaccurate picture of your overall financial health. Thankfully there are plenty of smartphone apps you can use to start tracking your spending and stop any bad habits.
A smart way to save some extra dollars is by breaking your spending down into categories and cutting back on any non-essential expenditures. Set aside a little time every week to ensure your spending is on track.
You should also be reviewing your bank statements at the end of each month, especially during uncertain periods where money is tight. This regular spending check is also a great opportunity to check for discrepancies and identify unnecessary expenses you can cut.
2. Set goals
By creating some realistic short and long-term financial goals, you can determine how you can save more and really take back control of your money. People who set themselves savings goals and commit to financial plans are much more likely to achieve them. This will help support having better financial security for your family and more monetary freedom for you.
You should start with financial goals that are large enough to be exciting, yet small enough to be achievable over the short term. This might be saving up for a new smartphone or taking the family on holiday. Either way, remember to take some time each month to review your saving progress.
3. Prioritize debt
Debt reduction should always be a top priority just behind having money for food, clothes, and shelter. Chipping away at your debt will eventually become huge dents over time.
So as long as you have the financial capacity, paying down as much debt as possible whenever you can is always a good idea. Plus, paying down your debt will not only feel good, but eventually, the more you pay off, the more you can put into your savings.
Always be strategic about paying down debt, especially if you can’t afford to pay all of them. Focusing on your smallest debts will give you the biggest sense of achievement which will help keep you motivated. But paying off the one with the highest interest rate will help you pay off your debts faster.
4. Expect emergencies
As having an income is fundamental for your financial security and achieving your financial goals, building up an emergency fund is imperative. Even putting aside a small amount every month into an emergency account is enough for a start, but you should eventually save up enough money to last for at least six months.
That way, you’ll be able to pay for any unexpected bills like car maintenance, cover the cost of de facto property settlement, or even help with surviving the next global pandemic, rather than relying on high cost products or payday loans to see you through. Alternatively, you may also decide to take out some kind of income insurance to ensure there’s enough to adequately protect yourself as well as the rest of your family.
5. Save more
Even while you’re paying off debt and putting some aside for an emergency, you should also be saving as much as possible. Ultimately, saving some money is always better than having no money at all. To help you save, remove the temptation of spending it by setting up automatic transfers so it goes straight into a different account. Preferably an account where you don’t have access to the funds online or via an app.
While you should be aiming to save around 10% to 15% of your income, look at your budget to see how much you can realistically afford to save. And if you’re able to afford more and have a long-term savings goal like a deposit for your first home, it may also be worth exploring other options like salary sacrificing and extra super contributions.