Family life can impose all kinds of financial pressures. Young children might need to be sent to nursery during the daytime, and the cost of your food and transport might be considerable. If you’re going on holiday with school-aged children, of course, you’ll also need to contend with inflated prices.
Coping with all of this might mean creating the right structure for your financial life. But exactly what might that look like?
Assessing Your Current Financial Landscape
Before you start making plans for how you’re going to behave in the future, it’s worth taking stock of the financial problems you’re seeking to solve. This will allow you to work out what changes are actually going to be effective. Look at where your money is coming in from, and where it’s going. Make a list of all the assets and liabilities you have.
Setting Clear Financial Goals
Setting goals can be a difficult thing. When those goals are poorly defined, they might end up creating confusion, and demoralising you. Ideally, financial goals should follow SMART criteria. In other words, they should be specific, measurable, achievable, relevant, and time-based.
Don’t promise yourself that you’re going to save more money. Instead, promise yourself that you’re going to save £50 each week to put towards a fund that will protect you in the event of financial difficulty later on.
Setting goals for the long term, and then dividing these into short and medium-term goals, can be hugely useful.
Building Your Emergency Fund and Managing Debt
We’ve already touched upon the importance of building up an emergency fund. This should ideally provide enough cash for you to live for several months without any other form of income. This will give you peace of mind, and allow you to make short-term sacrifices in order to protect your longer-term financial future. For example, you might elect to quit one job in order to start another.
If you’re in debt, then paying it off quickly can also be wise, since it will allow you to spend far less in the long run. Identify the high-interest debt, like credit cards and payday loans, and pay these off first.
Investing for the Future and Protecting Your Family
If you don’t have any debts, then you might seek to protect and grow your wealth through investment solutions like ISAs and private pensions. When making investments, make sure that you consider the risk, and that you take appropriate steps to mitigate it. Hedging and diversification, for example, can often make a big difference.
It’s also important that you look for help from FCA-regulated organisations and professionals. If you’re mis-sold a financial product, then you might have the option of taking legal action to seek a remedy. Depending on your circumstances, a no-win no-fee solicitor might be able to do this on your behalf.
Regular Review and Adaptation
No financial plan is going to be able to last for years and decades, especially given the pace of change in the world around us. As such, it’s worth getting into the habit of regularly reviewing your situation, and reviewing your plans so that they align with your financial circumstances, as well as the broader economic conditions.