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.
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.