Saving and planning for your financial future can be a difficult task that often includes a great amount of stress. This process can seem intimidating and impossible for many individuals, especially young adults who are juggling the task of providing for themselves and their families. It can seem like a challenging and murky field to navigate, but it does not have to be include excessive hardship or unnecessary worry. If you are a young adult with a family and are in need of assistance with financial planning for your future, here are a number of helpful strategies to employ to ensure you and your family are on solid ground.
Saving for Retirement Should Not be Neglected
If you’re like many families, retirement can seem like a prospect that is far into the future. The idea of no longer having to work and being able to relax in our golden years is the dream many of us have for our futures, yet we often neglect to plan for this moment. Instead, we are focused on the present moment, specifically paying for the basic necessities and all of the purchases that accompany raising children.
It’s no secret that modern life includes a large amount of expenses, many of which are unforeseen and difficult to plan for. Retirement is one particular expense that seems difficult to address, especially when it seems like a million miles away. But one of the best times to start planning for retirement is very early in one’s career.
Compounding interest is one of the biggest things that a person should seriously consider taking advantage of, as the benefits of this aspect increase dramatically the earlier a person starts contributing to a retirement fund. Whether this is a 401k, IRA, or other type of retirement account, taking advantage of compounding interest is essential in maximizing your ability to retire at a reasonable age with a significant sum of money saved.
Compounding interest is the interest that is accumulated on the principle as well as interest accrued from this amount. If you invest $100, you will begin earning returns not only on the initial amount that you put into the account, you will also be receiving money from the interest gained from that initial investment. A small amount of money over time can eventually become a substantial amount with this factored in.
Always have an Emergency Fund on Hand
No matter how good a person is at paying their bills on time and making sure their financial house is in order, inevitably an event will occur which significantly alters their usual fiscal pattern. This can be an event such as a job loss, an injury that restricts a person’s ability to work, a reduction in hours at work, or another event that causes financial stress to the family.
This is why having an emergency fund saved up is essential in order to prevent such an event from completely devastating your financial situation. Experts recommend having at least 3 months worth of bills and expenses available in the event that such an incident takes place. This fund should be kept separate from other funds in order to prevent a person from using these funds to pay for other bills. If only one person in your household is earning an income, it is recommended to have at least 6 months worth of funds on hand.
Plan for the Worst-Case Scenario
The death of a loved-one, specifically a person that is the head of the household, is a devastating event for any family to have to deal with. This event can be greatly exacerbated if that person did not have a living will to direct where savings and assets will be transferred to. An all too common scenario that results from such a tragic incident is that families will fight over an estate, causing serious stress and hardship as well as wasting precious funds by having to go to court to settle the case.
For this reason, it is absolutely essential for a family to have a clear living will set up in order to adequately designate who will get what in the unfortunate event that someone passes away unexpectedly. It is also important to designate who will look after the children in the event that both parents die unexpectedly, as children will need a sense of stability in the face of great turmoil.
Build a College Savings Plan
The price of college continues to grow with each passing year, making this process increasingly intimidating for students looking to attend higher levels of education. A parent can significantly lighten their child’s load by properly planning for their future educational needs
, and this means finding a college savings plan that will help a person reach their potential without being saddled with excessive amounts of student loan debt upon graduation.
Many states offer college savings plans that help a family save for college. 529 plans offer an efficient way for a family to pay for college at a reduced cost to their child. Often referred to as a ‘prepaid tuition plans’ offer the opportunity to pay for future college credits at current rates, allowing a family to remove the possibility that their child will have to pay exponentially more than what the current rate of tuition is. While the initial cost may seem like a lot, the overall savings you will receive by paying for college at current rates are substantial. It is highly recommended to take advantage of such plans if you have future college students in your family.
If your family is in need of financial planning advice, Foxstone Financial is your trusted source for navigating this critical area of life. Whether you are in need of retirement advice, are looking to plan for your child’s future college needs, or just have questions about how you can be fully prepared in the face of uncertainty, we are your trusted financial experts. Contact us today
and allows to help you get started on the road to financial freedom.