Does financial planning fill you with dread? Are you happier spending money than thinking about it? Family finances can be confusing but if you don’t plan ahead you could be gambling with your financial future.
Being financially savvy isn’t just about saving or getting the best deals from your service providers – although this is all good advice – financial planning is also about spotting the things that might put an end to your current financial lifestyle.
Here are three things that should be in every family’s financial plans.
Loss of income
This is an obvious one but have you really thought about what would happen if your family’s income was suddenly to drop or disappear altogether? Unemployment, business failure or ill health can, and do, happen and if you haven’t planned ahead this can have a devastating effect on your budget.
Saving is a great way to cushion any future income loss but there are other positive steps you can take like taking out income protection insurance, which will pay your bills if you lose your job and let you get on with finding a new one. Likewise insurance against long-term illness can be included in your health insurance so that your family income isn’t crippled by ill health. Plan ahead and you won’t find yourself losing out.
Not being covered
From home emergencies to car accidents – life can be expensive if you aren’t prepared for it. Most people know about and indeed I hope have insurance against potential disasters but what you might not know is that not all insurances are the same and you could not be as protected as you think.
Be prepared then to investigate your insurances a little more thoroughly so you know exactly what to expect if the worst happens. Check out for instance exactly what your home insurance will cover you for and what it won’t and then decide if you need additional insurance. Investigate standard and optional car insurance cover and find the one that is the best fit for your family’s driving needs. Don’t just assume everything is going to be ok – it probably will – but just in case, be in the know and get covered up.
Change in circumstances
Life is full of change and just because your finances are appropriate for your family now doesn’t mean they will be in the future. We aren’t necessary talking about bad changes either. Positive changes like another child or a house move all impact your bottom line. Your finances need to be flexible to cope with change and part of financial planning is ensuring you have built in that flexibility so that you’re covered not just for the worst but for the best as well. Consider what financial commitments you will need to support change. Take action now by starting or increasing your saving plans, investing in your home to increase its value or learning new skills that will help grow your income.
Finances don’t have to be difficult – with a little forethought you can still enjoy spending your money but know you have a backup plan for whatever life has in store.