Family Finance: What’s the Best Way to Manage Savings?
Managing your money and savings is important for every adult. Checking out a useful guide to saving money should be at the top of everyone’s list when it comes to looking after their finances. But it becomes even more important (and even more challenging) when you start a family.
#1 Get a Family Savings Account
The first thing you want to do is find a good family savings account. It should have an attractive interest rate and every member of your household should be able to deposit money into it. This is sort of like having one piggy bank that everybody is putting money into. It makes your savings more manageable because you’ve got it all in one place.
#2 Plan Your Financial Future
Eventually your children are going to grow up and start families of their own. To help insure their success, you want to make sure you have all your ducks in a row. You can do this by making a will, creating a trust, and otherwise plan for your old age so that you are prepared for whatever might happen.
It’s absolutely necessary to do these kinds of things with legal experts. They will help you create carefully planned wills, trusts, and even powers of attorney documents.
#3 Get Your Kids Involved
Pass on smart money habits to the next generation by getting your kids involved in family savings. Let them help plan a family goal like a vacation or even just a family dinner at a favorite restaurant. Teach them how to figure out how much they need and create a plan for saving money. Then, start helping them develop the discipline to save money to achieve that goal.
This instills smart habits at a young age so that when they grow up, you can be sure they are prepared to responsibly handle any trust money you plan to give them or even just their own income.
#4 Balance Your Savings Priorities
When you have a family, there are certain major expenses that you can pretty much guarantee you’ll have to deal with eventually. That includes:
- College for your children
- Weddings
- Retirement
These are some of the more expensive things you will almost definitely have to pay for eventually. There are also some other more minor expenses you’ll want to save for like holiday shopping and family vacations. Here are some tips for balancing it all:
- Keep a savings account with a minimum of 3 months’ worth of living expenses (6 months would be ideal). This is your security fund to cover any unexpected job loss, medical emergencies, etc.
- Start a college savings account as soon as your child is born. Calculate how much you need to put toward it each month over the next 18 years.
- Put the rest of it into an investment portfolio. And add more money to your investments each month. This investment portfolio will mainly be for your retirement. Even the most conservative investment portfolio will earn much higher interest rates than the best savings account.
You should also create separate savings account for different savings goal. That is, have one savings account for family vacations and another for holiday shopping, etc. This makes it easier to balance different goals as well as see exactly where your money is going.
Using these smart savings habits, you’ll be able to manage your savings effectively and make sure that your children grow up to be equally responsible with the money they inherit from you and earn in their future careers. Planning ahead now will save you and your family from financial chaos in the future!
