Finance Board

Sex has a lot to answer for babies usually which then with time and much financial investment grow up to be beautiful mutations of their parents. Yet as the family absorbs more money as it grows, the need for financial planning and protection becomes more important. So, where do you start and how do you move your finances forward?

First of all there are “The Considerations”:

* If surplus funds become available, could these be invested? If so, will you choose a medium or long term investment?

* Will you need an emergency fund?

* Will you need to save for short-term events such as Christmas, holidays and birthdays?

* Are you ready to save for a pension? Do you need to include your partner in a pension plan?

* How much financial planning do you want to do your children? For example, is private education an option or priority and do you want to start saving for university fees?

* How much borrowing will you need to do for buying a home and is it worth considering a mortgage payment protection plan?

* Is life insurance or life assurance worth considering as security for your partner and family?

* Do you need income protection insurance?

* Are all of your belongings and possessions adequately covered by household insurance?

Then there are “The Resources“:

* Have you taken advantage of all the family finance government initiatives involved? These include Child Benefit, Child Tax Credits, Child Trust Funds (CTFs) and the Educational Maintenance Allowance (EMA) scheme. Directgov is an excellent resource for information on public services (http://www.direct.gov.uk/Homepage/fs/en )

* Do you have the best possible deal on your finances? This includes your credit card, any secured or unsecured loans, your mortgage, remortgage and insurance. If you’re not sure, it’s not difficult to do some investigative homework. Moneyfacts ( http://www.moneyfacts.co.uk ) and Moneynet ( http://www.moneynet.co.uk ) are two popular sites for consumer research on financial products. If you live in the US, the website Lowermybills may prove helpful (http://www.lowermybills.com/ ).

And that’s just when the kids are still young. Once they’re well established at school, you may wish to still evaluate the emergency fund, medical insurance and protecting your income against illness. The risks may change as the family develops so don’t think that financial planning is a one-off event. Keep these issues in mind as your funds change.

As you get older you may wish to consider writing your will and inheritance planning, planning for long-term care, protecting your capital, continuing your income should anything happen to your partner and even indulging your grandchildren. There are a variety of publications from companies such as Which? that can help you tackle what may seem like impossibly complicated tasks.

If you’re aware that one of the above issues needs to be tackled, don’t neglect the gut feeling. Ask around for financial advice, but be aware that you need to be the decision maker, so gather as much information as you can and then make an informed decision. If the advice is conflicting, accept that financial success may always be based a little on luck and risk, though nothing excuses thorough research and planning. Read the papers, surf the web and ask around: the information is accessible!

Resources:

http://www.direct.gov.uk/Homepage/fs/en (Direct Gov)
http://www.moneynet.co.uk/ (Moneynet)

About Rachel:

Rachel writes for the personal finance blog Cashzilla:

Cashzilla is a personalfinanosaurus.

“Rachel” means sheep in Hebrew: “little lamb” or “one with purity”.

Cashzilla means financially savvy with great fiery ferocity.

* * * * * * * * * * * *

Contact details:

Rachel Lane
http://www.cashzilla.co.uk
rachel@positiveinterest.com
0131 561 2251

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Do you think you have a lot of bills? If so, you are probably
right. But have you considered the bill that costs you the
most each month?

On average your housing costs probably run about 30% of your
take home pay. Your other bills which include utilities, credit
cards, etc. also run about 30% of your take home pay. It
probably takes another 30% to run your household and if you
are lucky you can stash the remaining 10% in a savings account.

What are your percentages? Do you know? That’s the problem.
Most people run their budget out of their wallet.

There is that hideous word “Budget”. Many people compare
operating their finances with a budget to having a ball and
chain attached to their wallet. They won’t be able to get
anything they want for the rest of their lives.

Let’s see if the following scenario fits you:

You get paid.

You write out your bills.

You give your spouse some money.

You wait for next payday to get some more money so you can
do the same thing.

You may not realize it but if you are doing this you are
spending a lot more money than you need to.

Most of the people I work with have no idea how much money
they make or how much they owe. While money may be important
to them it is way to much trouble to learn how to manage it.
This is the very reason there were $1.5 million bankruptcies
in this country last year.

I can almost guarantee that if you are trying to run your
finances like the scenario above at some point you are going
to run into problems. It simply can’t work.

The main reason for this is that you never get a broad picture
of where you are financially. You pay the bills and hope you
have enough money to buy your groceries and put gas in the
car until next payday.

Most people can add and subtract. That’s all there is to a
budget. If you aren’t willing to take the time then living
paycheck to paycheck will be with you the rest of your life.

I call this “Financial Complacency” which simply means that
you know you need to manage your money better but aren’t
willing to do what’s necessary. Here are a few excuses I hear
to justify this:

I don’t make enough money.

I owe too much to set up a budget.

I’m not good with numbers.

I just don’t have the time to keep up with a budget.

I can’t get my spouse to work with me.

Do any of these sound familiar?

Well, that’s the problem but what about a solution. The
solution is simple no matter what your financial situation
is.

First, you must find out where you stand now. That could be
as simple as writing down your income and bills and expenses
on a piece of notebook paper. Then subtract your expenses from
your income. Make sure to include your household expenses
(groceries, car gas, etc.) in your expenses.

Now look at the numbers. Do you have anything left over? If
so what are you going to do with it? That’s the next step. If
you don’t then you need to consider cutting some of those
expenses.

Now you need to decide what you really want your money to do
for you. Set your goals! This could be saving for your
retirement, buying a home, college for the kids, getting a
new car or any number of things. That’s why you have to decide
for yourself. There are just too many variables for someone
else to help you.

My first suggestion is that if you have credit card debt you
look for a way to pay them off and stop using them. Realizing
that goal could make your other goals more likely to succeed.

Now it’s time to set up that dreaded budget. Where are you going
to find the time and desire to write everything down that you
spend and all the other stuff that goes along with keeping a
budget? The answer is that you don’t have to!

One of the biggest myths about budgeting is that you need to
keep up with it everyday. That’s the reason so many people
refuse to try.

It does take a little time to get your budget setup. There are
a lot of things that need to be considered. But once your
finances are down on paper there is no reason to work on it
except on payday. You will find a link to a free budget like
this in the bio of this article.

If you believe that managing your money is to difficult or just
too much trouble consider the alternative. Not managing your
money is probably robbing you of thousands of dollars a year
and could lead to financial disaster.

Terry Rigg is the author of Living Within Your Means - The Easy
Way http://www.homemoneyhelp.com/ebookadpage.html and editor
of The FREE Budget Stretcher Newsletter and Budget Stretcher
web site http://www.homemoneyhelp.com. He has 25 years of
experience counseling individuals and families concerning their
personal finances.

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