Creating the right financial plan and sticking to it is key to avoiding some of the money mistakes that often arise in families. Financial planning experts believe that with these tips, you can be smart about your money and get what you want from it.
Dealing with family financial challenges
If you’re facing economic difficulties as a couple, remember you’re not alone. Most couples go through the same situation. The most important thing to do amidst a severe financial crisis is to devise a plan to come out of it. Studies have shown that finances are among the major causes of family disputes, and it gets more serious with children in the picture. Issues such as spending, saving, investing, sharing bills, and many more are at the center of money challenges.
All the same, as noted earlier, what you do to come out of the situation is the most important part. Therefore, the following tips could help you get out of the predicament and to avoid falling into the same trap again.
Have mutual finance goals
One of the most important decisions you can make as a family is to develop financial goals that both you agree with. Both of you must agree on what you want to do with money, who will do what, and how you plan to save and invest. This could go a long way to avoid avenues for disagreements. Concisely, ensure that you develop and accomplish your family goals jointly right from the beginning.
Know your starting point
A journey of a thousand miles, they say, starts with a single step. And so, effective financial planning begins with knowing your net worth-what you have at hand, both in terms of assets and liabilities. Every single line in your balance sheet tells a story. Your list of debts can be a great eye-opener, so don’t be ashamed of your past actions. Learn from your mistakes (failed ventures, unnecessary loans, etc.) and move forward without pointing fingers, rotating in guilt, and playing avoidance.
Buy enough insurance-early
Two mistakes often happen with life insurance. First, people fail to buy it-either because it doesn’t seem to be urgent if they’re in good health or because it generates conversation on issues they would rather avoid. Besides, many people let fear control their decision when they purchase life insurance.
In the Philippines, it’s advisable to engage a reliable expert in insuranceto help you understand more about specific packages. All the same, [life insurance] is about handling economic loss and not an emotional one.
Maintain absolute honesty in family finances
As a couple, you should be completely honest with each other. Most family disputes arise when one partner feels shortchanged. Therefore, transparency is very important from the onset. Be open about what you earn to erase any doubt about what you can afford to contribute toward family goals. Be open about your credit history, the loans you have, credit cards, and anything that touches your financial life.
Importantly, wrap it up with a budget, which is a guideline to help you go about how you use the money. Once made, stick to the budget to avoid impulse spending. A great lesson is to live within your means.