Planning For the Future By Saving The Present

Have you seen your parents planning family finances? What are your investment plans? When do you plan to start your retirement savings? What is your average family savings? How do you plan your family finance? Insurance agents and financial consultants always start the discussion with these questions. I used to laugh it out when these questions are posed?

Who cares about retirement? I can plan for it when it is near used to be my answer to the above questions. Well, I am sure most of you will be thinking the same. When I sit down and contemplate on the above questions after committing costly financial mistakes, all these questions start to make sense and it now dawns on me the importance of financial savings. I am writing this to give you a few tips on managing family finances and maximizing average family savings for a better future. I am narrating my firsthand experience of things which I could have done better. Let me hit the bull’s eye, with these points if I make one of you realize the importance, I think I have accomplished my mission.

#01 Plan for retirement early:

What is the right time to plan your retirement savings? How will it affect my family financial planning? Well, retirement savings should start from the moment you receive your first salary. When you are emotionally drained and physically weak, we can only depend on our savings to find solace in the hands of doctors to stay alive. To age comfortably and happily it is best to plan for retirement from day 1. Look for investment plan which helps you in obtaining tax rebates. This will help you in enjoying the twin benefits of savings and tax rebates. When your employer offers you retirement savings options make sure you utilize it to the fullest possible extent.

#02 Emergencies Response plan:

Contingency plans come in handy during emergencies, wait, what are the financial emergencies? Unplanned pregnancy, accident, terminal diseases, layoffs, repairs and renovations are examples of emergencies. Are you well prepared for these emergencies? It is always a good practice to allocate a part of your average family savings to an emergency fund. Plan the emergency funds and invest them in areas where you can immediately draw the money as well as get good value for your investments. Investing in fixed deposits and other savings plan will help you in maximizing your savings

#03 Tax free options to support kid’s education

 When your family grows, you will not be able to effectively plan yourfamily finances.  You will be inclined to spend on day to day needs rather on long term investments. There are numerous tax free options available for your save your kid’s tuition fees and use it in time of need. 529 plans which allows increased contributions tax free is a good investment option. Options like these will help you in planning your long terms goals.

#04 Save the present:

Once the long terms goals are taken care, it is time for the short terms ones. Prepare a to do list of items and open a savings account or flexible fixed deposits for each goal and start saving. The options chosen should have good returns to boost your family savings. For example, you are saving for your marriage; once you have saved enough for your marriage continue to contribute the same amount monthly in that account. This additional amount saved will give you an additional leverage to invest in a better option like car.

#05 Innovate and be creative:

Have you seen the movie “Confessions of a shopaholic” and remember the girl with the “green scarf”? She will conduct a garage sale to pay off her debts. Similarly you can conduct a sale to sell your used and unused items to raise money for your short terms investments.

Paste the goal into a piggy bag and start tossing the coins from your daily purchases into it. When you clear it at the end of 6 months to 1 year, you would have saved enough for your short terms purchases.  You can sublet one of you rooms to a bachelor to earn extra money. By finding different ways to create a passive income you increase your average family savings multi-folds. It is always in our hands to save and spend.

Summing up:

It is never too late to start your investment plans. You will have to find the right mix of short terms and long term investment strategies to maximize your average family savings when you plan your family finances. Prevention is better than cure. Better to save now than to repent in future. Planning your investments with the right blend will give you both harmony and financial freedom.

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Establish an Emergency Savings Fund in 4 simple steps

Why do we need Emergency savings?

This is the first question that crops up in our minds when we think of Emergency savings. Emergency savings is an essential part of our financial management. You might not know its importance initially but it can have a huge payoff later at the time of need. Being prepared for an emergency can be a wise step for a better and organized future.  A sudden home repair, an urgent car repair or a sudden travel to meet an ill person, such unplanned instances can occur anytime and can become a burden if you’re not financially prepared for it.

Emergency fund

Now that you know the importance of it, you might think about how much to save for an emergency and how to get started with it. Let’s know about the figure to keep aside as emergency savings. We share with you 4 simple steps to establish an emergency savings fund.

4 simple steps to establish emergency savings fund:

How much should I save in my Emergency savings account?

Without knowing a target, it would be difficult to save. The money in your emergency savings should be enough to cover your major expenses for 6 to 9 months.

Start with a 3-months target:

If you’ve just started to save, this figure might look challenging. To get started, you can fix a short-term goal as “money to cover your expenses for 3 months” and build from there.

Know the expense sectors and set an amount for each sector

Now that you know how much to save as emergency savings, list the areas where you spend regularly. In order to evaluate the exact amount to save as emergency savings, you need to consider the following expenses:

  • Food expenses

Evaluate your monthly food expenses for the areas where you can cut down the costs and add this amount to your emergency savings. Meanwhile, look for alternate ways to reduce your food expenses for instance: cutting down on regular dine-outs, cook your meals; pack your lunch, etc.

  • Housing expenses

List down all the costs related to housing such as rent or mortgage, insurance, utilities and property taxes. Add this amount to your emergency savings fund. It is necessary to have enough money in your emergency savings account to cover the emergency home repair costs.

  • Transportation expenses

Track down your daily commuting charges and consolidate it to get the monthly amount. However, if you own a vehicle then add all the costs related to your vehicle (maintenance cost, fuel cost, emergency repair cost, auto insurance and car loan) to your emergency savings. Analyze your transportation expenses and see if there’s any scope to cut down on the fuel charge and save it.

  • Insurance

Add all the insurance costs such as dental, medical, disability, life insurance etc. to know the estimate of your monthly insurance expenses. COBRA (the Consolidated Omnibus Budget Reconciliation Act)enables you to stay on your former employer’s health plan for a limited period under certain circumstances such as voluntary or involuntary job loss, a transition between jobs, divorce, death etc.

  • Debt repayments

Clear off your credit cards debts on time to maintain a good credit score. To avoid any stress in the case of unemployment or bad financial situation, take immediate steps to get rid of all the debts that you have. Try to create a balance between saving money and clearing-off debts by planning ahead and following a proper budget. Once you clear all the existing debts, avoid getting into any new debt.

  • Personal expenses

Don’t forget to consider your personal expenses to know how much to save in the emergency savings account. Include every cost such as toiletries, parlor expenses, haircut; adding all the costs might make a huge difference to the overall budget.

Create a savings plan

To get started with the savings plan, add as savings any bonus or tax refunds that you get. Then, gradually start putting a fixed amount to your savings every month.

Where should you put your emergency savings

There are 2 options to save your money:

  • Regular savings account:
  • Easy to access
  • Good option for beginners who have just started to save and has less money as savings
  • Zero or very low minimum balance to be maintained
  • Money market account:
  • higher interest rates with growing balance
  • Easy to access
  • Requires higher minimum balance to be maintained
  • Offers better returns than a regular savings account

Summing up:

Expenses can crop up anytime and if it’s something that needs to be considered urgently, you should be prepared for it financially. By following the 4 simple steps mentioned above, you will be able to establish an emergency savings fund and have a financially secured future.

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Financial Planning for Marriage

It is not every day; you are going to be married and not everybody who gets married life happily. What are the factors that determine a happy married life? What are the traits you have to look for in your significant other to lead a happy life? What are indicators and tell-tale signs of a right choice?

Well as I said, there are a lot of other factors, which determine a happy married life out of which the financial decision taken during the marriage life plays a very pivotal role. You can judge a partner by looking at the way he handles finances. Miser and Spendthrift are decided based on his spending habits. You gain or lose respect among your family members based on your spending habits. So what are the things you have to look for when you both sit down to plan your marriage finances?

Financial Planning for Marriage

Here are five things to note when you plan your marriage finances:

Thoughtful decision-making:

After choosing our partner carefully, it is always important to take the correct decisions at the right time. This will help in planning the marriage without any hiatus. There are a lot of options available in the market and the marriage can happen throughout the year. Nevertheless, choose the exact time for the marriage is most important. When you try to coincide your date of marriage to any off-peak holiday season then you are going to save a lot of money by paying less for various things. Flowers, hotels and other things are going to be very cheap when you choose an off-peak season. Marriage expenses are a major chunk in your marriage financial planning.

Making the right choices:

The wedding happens once in a lifetime for most of us. Making the right choices for your wedding is very important. Right dress, theme, makeup, chauffer, destination, the place will make the wedding memorable and everlasting. What are the things you have to keep in mind when you choose things?

For example, you can hire the wedding gown instead of stitching or buying one. This will save a lot of money since you will be wearing the gown only on the wedding day and not at any other time. The theme chosen for the wedding should also be chosen carefully, which looks aesthetically appealing yet cost-effective.

Future Stability:

In Marriage financial planning, you should also consider planning your finances at least for two months after marriage. Since you spend most of your savings on marriage, most people are likely to suffer without adequate finances to buy even the basic amenities immediately after marriage. When you plan for the first 03 months of marriage along with you marriage financial planning, it helps you in keeping your best foot forward after the marriage.

Minimum amount needed after marriage = (monthly bills+ rentals+ loans+ amount spent on basic amenities) x 3 or 4.

This will help you to ascertain the amount needed to start your married life on a happy note.

Don’t make the same mistake twice:

It is alright to make mistakes while planning your finances, it is best not to make the same mistake twice because the mistake will be very costly when you make it the second time. It is always best to note down the financial errors you made and should ensure that you do not find yourself in similar circumstance again.

Before you spend, you should ask yourself, “Is this worth it?”

You can spend only when the answer to the question is “yes”. Pause and think twice if you are unsure on the answer to the above question.

Penny Saved:

Whenever we are taught about financial planning, all the experts use a term called “Risk management.” It is always best to do a risk assessment during marriage financial planning. In the risk assessment, you should identify the things, which can go wrong, and the place where money can be saved using alternatives.

A penny saved is a penny gained. The moment you identify alternatives for the conventional items, it is always better to use the alternatives to save some money. For example, you can choose a DJ instead of a live music band. This will help in savings which can be used for future.

Summing up:

Planning marriage finances is not an easy but a daunting task. There are usually a lot of people involved in the planning process. You can easily be misguided when the emotions run high during the decision making process. It is always important to be rational and practical while making financial decisions. A good start to your married life is important like marriage. A well-planned marriage and married life are always important for successful married life. Remember it always happens once and it better to make it the best.

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