Family finances can be an overwhelming topic to dive into, especially if you are one of the millions of Americans living paycheck to paycheck. Sometimes it seems downright unreasonable to be worrying about the future when you feel like you’re barely scraping by to put dinner on the table or top up the gas tank. However, there are three important points to consider when outlining your monthly expenditures that could make all the difference between smooth sailing or financial crisis for you and your family down the road.
Getting Rid of Debt
No one is saying it’s going to be easy, but cleaning up your debt as soon as you can will help you on the way to a higher credit score. Lingering student loans and credit card arrears can prevent you from making large purchases for your family. You may find that a low credit score stands in the way between you and the larger car or house you need to accommodate your growing family. Even if you are not in a financial position to start paying debt off entirely, making your payments on time will go a long way towards keeping your FICO score in good standing. Paying more than the minimum due will also be a great help in the long run, even if it’s only an extra five or ten dollars a month.
Keeping Your Family Insured
Life insurance is hugely important when you have a family. In fact, both parents should be insured, regardless of whether or not they are both employed. Single parents absolutely should have coverage available for their children in case the unthinkable happens. You don’t want to leave your kids alone with crushing debt and without financial support. Many places offer free price quotes for insurance in Des Moines, and in most instances, you can obtain these quotes online before you even visit a local office.
Saving for Retirement
If you’re lucky, you work for a company that offers its employees an employer provided defined contribution plan, such as a 401(k). These are pensions to which a portion of your paycheck is automatically deposited into a retirement account, and is usually matched by an equal contribution from your employer. This type of account is a great start, and will go a long way towards helping you plan for your retirement. In many cases, though, it is not sufficient to rely on a 401(k) alone. To ensure you will be able to retire with enough money in the bank to survive, start making monthly contributions into a secondary retirement account, such as an IRA, even if you have to start very small.
Whittling away at debt may seem like a long, uphill battle, and you may feel like your retirement planning is barely a drop in the bucket. However, working towards these goals while keeping your family insured will establish excellent financial habits. Family finances do not have to be a mind-boggling affair. Financial advisors at your bank and agents at your insurance company will be happy to advise you on the appropriate options for your family, as you navigate a plan for the years to come. By taking a proactive approach, you can prevent much frustration down the road.