Collaborative post
Dealing with your family finances can feel like a burden. In fact, it can be so unpleasant that a lot of people simply put off doing it until the distant future.
The only way through is to literally bite the bullet and get on with whatever you’ve been putting off. While it might feel painful, it’s always worth it when you finally get jobs done and put them behind you.
So, what should you be doing sooner rather than later?
Drafting A Will And Estate Plan
One of the things you definitely don’t want to put off is the drafting of a will and estate plan, as explained by sites like https://www.harpermacleod.co.uk/expertise/individuals-families/wills-trusts-estates/making-a-will-in-scotland/. If something were to happen to you and your spouse, then you need a plan for how to divide up your money once you’re gone.
A lot of people make mistakes with estates and wills by not specifying what they want to happen to their money. Because of this, upwards of 50% of the estate value can be lost in things like taxes and legal battles. Therefore, you’ll want to get all this locked down with the right documentation.
Build An Emergency Fund
Families should also have an emergency fund they can fall back on, according to https://investor.vanguard.com/investor-resources-education/emergency-fund. These should have enough cash in them for three to six months of expenses as a minimum.
Unfortunately, the majority of families don’t have a fund like this. Most are operating paycheck to paycheck, which is causing financial stress and problems with relationships in the household.
Pay Down High-Interest Debt
A lot of families also get into the habit of taking on debt to meet their expenses, some of which is, unfortunately, high interest.
The problem with high-interest debt is how insidious it is. The more you continue to rack up payments, the more damaging it becomes.
Therefore, work to pay down high-interest debt. Look for how you can cut the amount you pay.
Create A Family Budget
If you can create a family budget to go along with this, then that’s also a good idea. A lot of families waste money on things that aren’t necessary, which really build up over the course of the year.
Review And Update Disability Insurance
If you can review your disability insurance, that’s also a good idea. Remember, something happens to a breadwinner, that could result in a lot of lost income.
All families should have some form of life insurance that pays out in the event that the worst happens. This should be close to the actual after-tax income of the person who might pass away.
Establish College Savings Early
Finally, you’ll want to establish college savings early. Getting on this treadmill when your kids are born increases the likelihood you’ll have the money you’ll need for their education once they reach the age of 18 or 19.
So there you have it: some family finance issues you’ll want to get on top of early to avoid stress and complications.