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Whether you’re solely responsible for the finances in your household or you’re helped by your partner, it can be hard to both cover your costs in the present whilst ensuring that you are building wealth and security for the future. Budgeting is a great tool to enable you to know what you have over and above every day expenses that you can put aside for other things. It is wise to have an emergency fund in case of unexpected events, and also to think about saving for your retirement.
Your level of income doesn’t matter so much as what you do with that money. Here are some ways in which you could turn your family’s financial situation around:
Start monitoring your expenses
The best way to start turning your family’s financial situation around is to monitor your expenses. As mentioned in the introduction, it doesn’t matter how much you earn; it’s all about how you spend those earnings.
I love Money Dashboard because it connects to your banks and analyses your spending in to categories. I never knew how much we spent on petrol until this app came in to my life!
Once you know what you have spent your money on, you can make a monthly budget for future spending. Think about all the necessities you face in life, such as petrol, food, rent, and utilities. Don’t forget to factor in birthdays and Christmas spending as well as big events such as weddings.
By monitoring your outgoings, you will know how much disposable income you have each month.
Invest to increase your wealth
If you have excess funds at the end of each month, another way in which you could improve your family’s finances is to make some smart investments.
Investing is one of the most effective ways to increase your wealth, and diversify your income stream. With a fixed salary, you know that your income is limited to a certain amount every week or month (assuming you don’t regularly get a pay rise), but making investments can open up new streams of income that ensure your overall wealth builds at an ever-increasing rate.
Investing comes in many forms; stocks and shares, ISAs, property, bonds. You don’t need to consult a financial advisor to begin investing although it is advisable to seek professional guidance if you are new to investing to ensure you understand the risks.
Individual stocks have always been popular, and something to look at if your employer offers a share incentive scheme. You could check out these stockpile reviews if you want to suggest the gift of stocks for your next Christmas present from one you love.
It is important that you do your research and make sure that you understand your investment. But that doesn’t mean you should be afraid to invest when the right opportunity presents itself.
Regularly save a portion of your earnings
One of the most important ways in which you can protect your family’s future in a financial sense is to start saving your money. Think about these different types of savings:
- Emergency fund. If you regularly transfer a portion of your earnings to your savings account with an automatic standing order then you won’t have to worry about accidentally spending your excess income. Chip is a great app which can help automate this too.
- Your children’s future. Investing early allows the power of compounding to work its magic! JISAs are a great way to make sure children’s savings are set on the right track.
- Retirement. It’s never too early to think about saving for operation old-age!
This is a collaborative post.