Getting Your Family Finances in Check

Finances are at the forefront of most of our minds right now. We’re in the midst of a cost of living crisis, where the price of many basics are on the rise, while wages remain stagnant. Landlords are increasing rent. Mortgage interest rates are increasing. The cost of food is going up. Fuel is at record highs. The list goes on and on. It’s not all too surprising then, that some of us are deciding it’s time to review our finances and determine what we need to do to stay financially afloat and provide ourselves and our loved ones with a good quality of life. Here are a few areas of focus, as well as tips and tricks, that should help you to take care of your family’s finances during these difficult times.

Budgeting

Budgets are one of the most important tools for financial health and wellbeing. A budget allows you to clearly see what money you are generating and taking home through your work, how much is going out of your accounts to cover bills and contracted financial agreements and how much disposable income you’re left with. If you’re living to a budget that you created a year ago, or even six months ago, chances are the costs of bills and essentials have risen since you last budgeted. This means that your budget may not accurately reflect your real life finances. As essential costs rise, disposable income reduces, meaning that if you’re still spending according to your old figures of dipsosable income, you could find yourself creeping into debt. Take some time to rebudget. This will give you a clear outline of what money you genuinely have available.

Taking Out Insurance Policies

Now is the time to take out insurance if you can afford it. Insurance policies protect you from unexpected costs in the future. Hopefully, you never have to cash in on your policies, but they do provide you with security that can prevent you falling into debt when times are already hard. Common insurance policies to consider include home insurance and contents insurance to protect your property and belongings, car insurance to cover your car (this is generally a legal requirement to drive and is non-negotiable) and phone or gadget insurance to cover your phone, tablets, laptops and more. If you have pets, you should have a pet insurance policy to ensure they can receive any veterinary treatment they require. If you have dependents, you should take out life insurance through AARP life insurance rates to cover things such as funeral costs and costs you would’ve covered yourself while alive. If you have appliances, you may want to consider appliance insurance too.

Clearing Debt

Already got debt? While the steps above can help you to avoid new debt, they may not help too much with any existing debt that you may have. Make sure to come up with a clever financial plan to effectively chip away at existing debts. This will help you to clear them as quickly as possible, reducing the amount you fork out on interest over time. Take a moment to total up all of your debt. Determine where your debt is (different credit cards, loans or other finance agreements) and the interest rates attached. If possible, balance transfer using an interest free period offer, as this will save you paying interest and will let your payments actually start clearing your outstanding balance. Alternatively, try looking at low interest debt consolidation loans. Make sure to always pay your debt on time and as agreed, as this will help improve your credit score in the process.

Saving

If possible, you should try to get some savings behind you. You don’t necessarily have to be saving for something in particular. It’s just good to have some cash to fall back on if you need. Take a percentage of your disposable income and commit it to a savings account. This should have a high interest rate. Just make sure to check the withdrawal terms on any savings accounts you set up, as some can hit you with high fees or charges for withdrawing outside of the agreed terms. For example, some LISAs (or lifetime ISAs) designed for saving a home deposit can charge you for withdrawing for any reason other than buying a house.

These are just a few steps that you may find help you to manage your family’s finances during these difficult times. If you are struggling, remember that there is always support out there. This can be in the form of financial advisors, support groups, grants, charities or even resources such as food banks.