Finances Money Saving Guide and Financial Planning
Keeping the household budget under control can be difficult for most families, even those that have high incomes. If you have loans, high credit card bills, debts or lack of finances you may be struggling to budget effectively and this may create family conflict as well as lack of ability to plan for future commitments such as your children’s college funds or sufficient investments to keep you in retirement.
Financial awareness is important not just in times of recession but also when spending leads to living beyond your means. These can all be causes of stress and anxiety. Being able to spend wisely is a good way of teaching your children skills for living as well as reducing stress making situations within your family.
Here are some financial tips that can help you if you are struggling with sorting out family finances or if you want to reassess what you are doing with your income and expenditure.
You may be surprised that if you sit down and work out exactly what your outgoing’s are in relation to your income in an honest way you can begin to become clearer about how to budget to meet your needs. Many people go through their adult life not being aware of their real income and expenditure and remain distressed month after month when there is a short fall. Some people stay consistently in debt just because they are too scared to do the math.
If you want to lessen this feeling of panic then consider personal financial counseling, it will help you to sort out your concerns and assist you to start getting control without needing to go to the loan sharks. If things are really worrying consider debt consolidation if needs be but do not put your head in the sand. However, If you have money left over after doing budget monitoring then you should consider putting it into a savings account to obtain interest not blowing it all at once. There are also personal finances software and free family budget planners which you can use on line to help you assess your family spends including monitoring over time.
Most people will need to save money for big expenditures, such as education fees, the purchase of property or to buy a car for example. The earlier on in life you can start saving the better because of the “law of compound interest”. This states that you make money on the interest your savings gives you as time goes by.
But this really only works if you do not touch the money you are saving for some considerable time, usually all your working life and that you invest regularly. Unfortunately, I need to point out an issue with saving money or more particularly putting money in an interest earning financial account or instrument such as a bond. Most interest bearing accounts except for junk bonds earn little interest nowadays.
It’s sad but savers are being penalized for saving while spenders are being rewarded. Fortunately, there are alternatives and I’m not talking about the stock market which is slanted heavily toward the big players.
My favorite alternative currently is putting some of your savings in rental properties. The returns can be in the high single digits with low risk if a property is properly managed. You may very well not be able to purchase a rental property, particularly multi-family properties, you may need a commercial loan for your investment to happen. A conventional commercial mortgage may be just what you need.
Unfortunately, many of the best deals in rental housing require renovations. For that you will probably need a commercial bridge loan as most conventional commercial lenders won’t loan on a property that needs renovation.
Just look at it as short term financing for a longer term investment. I suggest you consult with your financial adviser to be sure investing in commercial real estate is a fit for your investment portfolio.
Most people unfortunately are not in this position, and you should not do it if it caused strain on your overall budget, but shorter periods of saving and ad hoc amounts when you can afford it will still give you better results than if you did not save at all and had to take out a loan.
Pay off your credit card bills before you consider putting your money in a saving account or in any other investment. In fact if you have money in a savings account and have unpaid credit card bills it doesn’t make sense not to pay your lenders as the interest charged on credit card and store card debt is many times the amount than the interest that you can get from saving your money in the bank or in a savings account. You can always start saving again but if you have debt hanging around over your head this will continue to have an emotional impact on you and your ability to be in control of your finances.
Some people play the credit card swap game of transferring debt from one card to another at zero interest rate for a limited time, and then swap to another just before this cards interest rates rises. There are many benefits of doing this and the credit card companies encourage it by offering cash back, air miles and other rewards but you should do it with caution because as if you are not able to keep track of the time when the interest free only time runs out and swap cards you will have to pay the full rate which as we know, is very high.
Not all savings accounts are born equal and you should research the best one for your needs, but do not let that stop you from embarking on regular saving. Even if you think you have found the best savings account a new deal may come on the market, however make sure that paying any early penalty withdrawals is worth the effort of swapping accounts.
The best type of insurance to invest in for your family, over and above the obvious such as house, car and medical insurance should be the kind that meets your family’s unique needs. Dental insurance, pet insurance, musical equipment insurance maybe the types of insurance that without it your family’s crucial day to day wellbeing would suffer, not just as an extravagance but a necessity.
But assess all of the insurance covers you have taken out and make sure where some overlap you are not paying out twice for cover such as for payment protection plans on loans credit cards, lost keys, travel insurance.