How To Improve Your Family Security and Finances

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In the U.S. nearly 15% of Americans have nothing saved for retirement. That's right, about 50 million people in the US have $0 in savings for their hopes to retire securely someday. 

If you’re looking to improve your financial security, you’ve come to the right place. We’ve rounded up family security and finance tips to help you prepare for the future. 

Whether you have three small children or you’re on the verge of retirement, today is always the best day to start improving your financial health. From life insurance to college and retirement savings, we’ve rounded up everything you need to know about how to be financially secure. 

Here's how to improve your family finances and secure their future.

Get Life Insurance 

What is whole life insurance and why do I need it? Whole life insurance protects your spouse and family in the event of an unexpected death. If you pass away, your family loses your income. 

Unlike term life insurance, whole life insurance policies last your entire life. They don’t expire as you age. That means your family has even more protection. If you pass away in your 90s, your spouse or children still receive the benefits. 

Whole life insurance is also inexpensive compared to some other forms of investing. Making your monthly payments on time is all you need to do to financially protect your loved ones. 

Boost Your Savings and Emergency Fund 

According to a study by the Federal Reserve, the average American doesn’t have enough saved to cover a $400 emergency. 

If you fall into this category, it’s not too late to start saving. There is some debate about how much of your income you should save for emergencies. While there isn’t a one-size-fits-all number, you want to be comfortable. 

Let’s say your expenses total $2,000 per month. If you lose your job, how long could you live off your savings? Having $10,000 in savings could float you through five months of unemployment. Saving $208 per bi-weekly paycheck for two years could get you to $10,000 in savings. 

Once you reach your goal of $10,000, don’t stop the savings there. Remember that there are plenty of other important things to save for. Keep up your savings rate and shift your money into retirement savings, investments, and your child’s education. 

While an emergency fund is important, saving for retirement and investing is arguably even more vital. Should you need more than what’s in your emergency fund, you still have these assets to pull from. If you never need them, they are growing at a much higher rate than a savings account. 

Create a Budget 

If you’re thinking there’s no way, I can save any money each month, it’s time to take another look. Budgeting isn’t about coupons and envelopes of cash. It’s about going through your expenses and really looking at how you’re spending your money. 

Take some time to go through your bank account. Look at how much you have coming in as income. Next, look at what expenses you have. Fixed expenses are bills you have to pay each month. This includes your mortgage, student loans, and car payments. 

Next, look at the expenses you can trim some costs if needed. You might not even realize you’ve been paying for three different music subscription services. If you aren’t using things such as group fitness classes or virtual cooking lessons, take the time to cancel them. It's the frugal thing to do for masterful money management!

Once you have a clear picture of where your money is going, it’s time to see what’s left. If the answer is nothing, take another look. Look at your grocery bill and how much you spend on coffee or eating out. 

Your food and entertainment spending are likely where you’ll be able to pull some extra savings. Set a goal for each of your savings buckets. You should always have one for retirement and emergencies. You may want more for things like a new home and your child’s education. 

Make a Plan 

Once you have your budget in place, it will be easier to tackle your next steps. Consider your financial goals. What does it mean to you to have financial security for your family? 

Some people, want to pay off their debt while others prefer to see a large emergency fund. Whatever your goals are, get them down on paper and start shifting your budget accordingly. 

Pay Off Debt 

Debt is expensive. The less debt you have, the less interest and finance charges you’re paying. With less debt, you’ll see lower interest rates on cars and homes. 

Without credit card debt, you’ll drop expensive monthly interest payments as well. Your credit score will improve, and you’ll have a better debt-to-income ratio. Pay down your debt and you’ll be that much closer to better financial health. 

Save for Retirement 

Retirement is one of those non-negotiables when it comes to savings. There comes a time in everyone’s life when they aren’t able to work anymore. Think about how you’d like your retirement to look. 

Make a plan to invest in your future. If you have an employer-funded 401(k) plan, start by maximizing this. An employer match is free money you should take advantage of. Next, consider opening your own brokerage or IRA account. 

Set up automatic withdrawals from your checking account into these investment accounts. When the money comes out automatically, you won’t miss it. The money goes right in each month and you can sit back and watch it grow. 

If you like to see a visual of how you’re shaping up, there are a lot of great apps you can use. You can put in all your accounts and funds and they will automatically add up your wealth and net worth. 

From here, you can see what that looks like when you retire. Is $500 or $5,000 enough to live off of each month? Remember that any wealth you accumulate can also be left to your spouse, children, and grandchildren to take care of them after you’ve passed. 

How To Provide Your Family With Finances for College 

When you first have a baby, college can seem far away. You’ll be surprised at how fast the time goes. How much you should save for college is often debated by financial experts. 

With the rising costs of education, if you have multiple children, paying for all their college tuition will be expensive. A 529 Plan is a tax-advantaged way to save for college. 

Instead of burning yourself out trying to pay for it all, aim for a third. Paying for a third of their education means your child handles a third and the final third is paid through grants, scholarships, or loans. 

Remember that your child should also be involved in this process. There are work-study programs and on-campus jobs that provide students with income to offset the cost of their education. Get them involved in the planning process as well. 

Also remember that paying for their entire education isn’t a burden you need to take on alone. Whether you pay for 100% or a few thousand dollars, there’s no right or wrong answer here. Starting young, however, gives you the best chance to accumulate some savings when they reach 18. 

Set Up a Will or Estate Plan 

Once you have children, if you don’t have a will, it’s time to get one. An estate plan is another security to make sure your final wishes are clear. When you pass away, your loved ones won’t have to fight over or sort out what asset is going where. 

These are especially important if you have young children. You can include medical directives, and who should care for your children in the event that you and your partner should pass away. 

These aren’t only for the super-wealthy. If you own a home or have any money in your bank accounts, you qualify for an estate plan and a will. Make sure everything is lined up for your spouse and children after you’ve gone. 

If you’ve also had more than one spouse or children from different marriages, an estate plan is a great way to avoid any tensions or confusion. Everyone will know your wishes and will understand what to do with real estate, investments, and assets which improves overall family security when it comes to money management. 

How To Improve Your Family Security and Finances 

Family security offers some much-needed peace of mind. It’s a great feeling knowing you’re on track for your frugal financial goals. 

For some, financial security means paying for their child’s education. For others, it’s a large emergency fund or retirement savings. 

Whatever financial security means to you, it starts with getting control of your finances. You can’t change where your money is going if you don’t know what you’re spending it on. Get your priorities in place and set your plan in motion. 

From life insurance to estate plans, it’s never too late to start taking advantage of these programs and securing your family’s financial future. For more finance and money resources to improve monetary family security, head to the Frugal Finances blog section.

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