When you start a family, the biggest challenge you will face is overcoming economic uncertainties. You can’t control how fast and how high the prices of basic goods increase, and you most certainly can’t expect your savings to shelter you from the effects of inflation. However, it still matters to think about making the most of what you earn to cover recurring expenses and fuel your goals.
The financial decisions you make today will have a lasting impact on your family’s prosperity. The earlier you come up with a strategy for improving financial security, the better prepared you are for any economic disruption that comes along. You only need to follow a few essentials for making the most of what you earn and controlling how much you spend as you set your eyes on the future. Here’s a guide you wouldn’t want to ignore.
1. Take a Good Look at Your Present Habits
Central to fueling your family’s financial future is analyzing your lifestyle and determining how much of a positive (and negative) impact it has on your current situation. You could be a high earner, and yet your income could hardly keep up with the bills and help sustain a high-end lifestyle. Prosperity can be temporary, especially when you take what you have for granted.
No matter how well life is going for you and your family, you should always expect major disruptions that could lead to financial losses. Assess your current lifestyle and find out how much money is lost on unnecessary purchases and services. This should help you adjust your lifestyle so it will be easier to adjust your habits and set aside more money for major expenses in the future.
2. Build a Budget and an Emergency Fund
Knowing your lifestyle should encourage you to take household budgeting seriously. Toning down your high-end lifestyle should also come with knowing how to allocate money for each household expense, including essentials such as electricity, gas, and food. Doing so would mean setting tangible savings goals.
If you want to set aside a large amount for plans such as buying a bigger house or funding your child’s college education, come up with a ceiling for how much money you’re allowed to spend. Aside from daily expenses, you should also consider debt obligations, taxes, insurance premiums, and mortgage payments. What’s more, use whatever money is left after savings to build an emergency fund to be used only for medical expenses, car and home repairs, and a sudden layoff.
3. Double Down on the Right Investment Vehicles
Relying on savings alone won’t help your family overcome major economic disruptions. As you build your budget and set aside a hefty amount for future projects and unexpected costs, a portion of your monthly earnings should go towards investment options.
Hardworking Canadians like yourself can get into long-term guaranteed investment certificates and treasury bills, or, if you have a high-risk tolerance, purchase shares from initial public offerings and get into forex trading. For more specific financial goals like securing your child’s college fund and buying your first home, you can start an RESP online and open a First Home Savings Account.
4. Apply for the Right Insurance
An accident or any other life disruption could upend your family’s finances and slow your savings down. Along with any other financial plan, you also need to get insured, especially for medical emergencies. Seek out different providers and ask for quotes, which you will need to compare. As you do so, consider your family’s current lifestyle and financial needs.
If you have just gotten married and are planning on having children, you and your spouse could go for a term life insurance policy at affordable rates. As your family grows, you can purchase individual plans for your kids or bundle your life plan with other insurance policies so you will only need to make a single payment each month. You just have to choose providers that offer discounted rates when you get more than one policy from them.
Endnote
You can’t control everything that’s happening in the economy, but that doesn’t mean you’re powerless. Rise above uncertainty and keep your family’s financial situation afloat by following the tips above.
