Your finances are a massive part of your family’s lifestyle and quality of life. Some people resolve a shortage in their budget by finding another job, but this is not always the right way to go. Sometimes, it may not even be a viable solution to the problem at hand. Simply put, no income is high enough if you’re reckless spending it. Now, there are some measures that you can take to improve your family’s finances. Here are five such measures that can put you ahead of the curve.
- Pay off your debts
The biggest problem with debt is the interest rate. You see, the original debt that you borrowed was probably used for something that you needed/wanted at the time. Instead of waiting to save enough to purchase/pay for it, you got a loan, and now you’re paying it back. The financial difference between the two (waiting and saving vs. getting a loan) is the interest rate.
Other than this, there’s also the fact that monthly credit payments add to your overall cost of upkeep. By eliminating debt, you’re not only getting one massive obligation off your shoulders – you’re also reducing the total amount of your monthly obligations.
- Try to settle any financial disputes
When it comes to inheritance and legal ownership, going straight to court and waiting for the verdict is not necessarily the best way to go. So, it might be a lot better to contact reliable mediation lawyers and ask them to act as intermediaries.
Also, do not assume that you’ll be living forever. Keep in mind that while no one wants to ponder on their mortality, think about your family after you are gone. Getting life insurance is a must but so is composing a will. Speaking of family disputes, this is how you can nip one in the bud.
- Improve your credit score
The next thing you want to do is improve your credit score. Now, many people believe that a credit score is something you need only when getting a loan. While this is partially true, you never know when you’ll need the next loan. Furthermore, it’s easiest to establish or maintain a good credit score when you don’t need a loan.
While closing some of your worst credit cards is a good idea, it might be for the best to keep some of your oldest credit cards around for a while. It prolongs your credit history by quite a margin, thus giving your credit score a substantial boost. Next, you need to bear in mind the significance of paying all your expenses in time.
- Start an emergency account
Having enough money that you can use in the case of an emergency is a huge boon for any family’s finances. It saves you from having to get more unfavourable loans. Ideally, the amount that you’re aiming for is 3-9 months of your expenses. So, let’s say you need $5,000 to make it a month. It means that an ideal emergency account has at least $15,000.
There are so many scenarios in which having an emergency account would be life-saving. For instance, let’s say that you’ve just lost your job and gotten hired again but now have to bridge the gap until your first paycheck from the new job arrives. Many people would go for a payday loan, which may have a 300-400% APR.
- Get everyone on board
You can’t do it all on your own. Sure, austerity is great for securing your finances, but imposing austerity on your family might seem cruel, at times. Make sure that you make a plan that everyone can endure.
Most importantly, make sure to talk to everyone and include them in this plan-making process. Making sure that everyone is on board is vital even if you are the primary earner of the family. Also, saving doesn’t mean not buying anything. More often than not, it means finding a simpler solution to the problem instead.
If you have children, this is your chance to make things right. Teach them about the value of money on simple things. Make them save for things they want. Teach them about income by giving them a regular allowance. Most importantly, let them learn from their own mistakes, and the only way to do so is to give them full autonomy over their money.
While unexpected occurrences may happen, if you prepare ahead of time and prepare properly, their effects should be somewhat dampened. With an emergency account, you should be able to avoid taking more debt, and even if you need to do so, a great credit score will ensure that you get favourable terms. As long as you know how to spend your money and transfer this skill to your kids, the long-term financial well-being of your family should be secured. Just don’t mistake being cautious and having a contingency plan for being a pessimist. These two are not the same.