Do you want to safeguard your family’s financial future? Assessing your current situation and mapping out a path to your short- and long-term goals is the best way to come out on top.
What is financial planning?
Financial planning is a process that helps to prepare you for the future. You can do this independently following trusted advice or seek assistance from a professional.
Starting with the analysis of your income and outgoings to assess your current situation, this process sets out a path to help you reach your long-term financial goals. Clear steps are included and set against a timeline so you can track your progress.
Getting started
- Set your goals
Consider your current situation and the future and set your goals. This is as easy as asking yourself what you want to be able to pay for and when. Your smaller short-term goals, such as saving a standard amount per month, will naturally feed into your longer-term targets.
Ensure goals are realistic before committing to avoid putting undue pressure on yourself. You should also pay off bad debt like credit card fees before you start making plans to save.
- Create a budget
With your goals in place, create a budget to get on top of your spending and saving habits. This budget should include your monthly income and essential outgoings including debts.
Next, find an everyday budgeting method like the 50-30-20 rule and plan around it. Following the latter method, 50% of your earnings are for essentials and 20% for savings, leaving 30% to spend freely. You may wish to adjust the ratios slightly, but this is a good guide.
- Improve your income
Let’s face it: parenthood has many joys, but the cost of raising children is not one of them. As long as you can do so safely, improving your income will benefit your family finances.
Consider returning for full-time work if you’re at home with the children or on part-time hours – but weigh up the potential earnings against the cost of childcare. Already working full-time? Consider starting a side hustle such as taking on freelance work or selling crafts, or using trusted platforms like Tradu to invest in the stock market for access to better interest rates than standard bank accounts.
- Secure your savings
Remember to store your hard-earned savings with care. Explore accounts designed for long-term savings to safeguard your funds for the future such as fixed-rate bank accounts and cash ISAs which offer tax-free savings up to £20,000.
What are the benefits?
When done properly, this gives you a comprehensive step-by-step guide to reaching your money-related targets. Armed with this strategy, saving to fund future family needs such as childcare, university fees and gifts towards property deposits becomes second nature.
Having a thorough financial plan will also bring peace of mind. You can rest assured that your goals are attainable and being worked towards in a measured and manageable way. This focus on sustainable growth is a stress-free approach to securing your family’s future.
Following a financial plan also mitigates the risk of spending beyond your means or being left with meagre savings to support you in your retirement.