5 Financial Planning Tips for Families

The following is a guest post by Philip Reed. Enjoy!

Save for College

If you have children, they are probably growing up much faster than you would like. Before you know it, they will be heading off to college to get an accounting degree or to become a doctor. Unfortunately, tuition costs continue to skyrocket, and total student loan debt has already ballooned to more than $1 trillion. However, you can help your children – not to mention yourself – by taking advantage of 529 college savings plans, which can give you a way to save for future college expenses with a tax advantage.

Establish an Emergency Fund

Life is full of unexpected surprises. Whether your car breaks down or your kid needs braces, there are times when you will need quick access to cash and won’t necessarily want to utilize your credit card. And, quick access to cash is exactly what an emergency fund is designed to provide.

However, nearly 30 percent of Americans do not have an emergency fund at all, and many other people have insufficient funds to protect themselves when unexpected problems arise. If you haven’t already started, set aside a small amount of money every month into a separate savings account; one day soon, you will be glad that you did.

Cut Your Expenses

Although making more money would be the ideal solution, that can be very difficult to do in an economy that is suffering from eight percent unemployment. Fortunately, there is another way to take control of your budget: reducing your spending. If you are not sure where you can save money, consider some of the following possibilities:

• Make more meals at home

• Borrow books and movies at the library

• Buy gently-used items on sites such as Craigslist.org

• Cancel subscriptions

Review Your Asset Allocation

There is no denying the fact that the past decade has been terrible for stock portfolios. Thankfully, it is hard to imagine another decade of such poor returns. However, you still need to ask yourself if you are comfortable with the amount of risk that you are taking in your portfolio. If not, consider increasing your allocation to bonds and other low-risk investments.

Increase Your Savings Rate

Thanks to a $20 trillion funding gap, future retirees will need to supplement Social Security with more of their own savings. Unfortunately, only 15 percent of people are saving enough in their 401(k) plans to retire comfortably. If you want to relax during your golden years, use some of the money that you save from cutting expenses to boost your retirement savings.

Conclusion

By following the tips listed above, you can avoid the major mistakes made by many families and put yourself on a path toward financial security. It will certainly take discipline and commitment on your part, but the rewards are worth it.

How about you all? What financial planning initiatives are taking priority in your lives these days?


Share your experiences by commenting below!

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