Build Good Money Habits for Your Family With These Essential Skills
Today's positive money habits pave the way for your family's future financial success. From paying your bills on time each month to building an inheritance for your kids, the behaviors you build around your finances can help your family consistently meet their goals.
Here are some essential financial strategies to consider implementing with your family.
Up your financial savvy
Positive money habits start with basic financial literacy. The finances of today have quite a few moving parts, and it's important to understand enough about each part to make more informed decisions and keep your goals on track.
Use these tips to get started with your essential financial education:
- Make a curiosity list: Make a list of money topics you don't fully understand. Consider it a tool to help launch your financial curiosity.
- Look for answers: Look for books, podcasts and help from financial professionals as resources to help answer your questions. Ask friends for their favorite money-savvy resources.
- Commit to continuing: Find ways to stay curious so you can continue to adjust your money and savings habits to reflect your goals.
Create a budget
You can't save for your future if you don't know where your money goes today. Creating and sticking to a family budget is an essential money habit that will help you manage a wide variety of financial goals.
Creating your budget means organizing all of your income and expenses. This will give you a clear picture of how much you spend and where. You'll see where you spend too much, where you save more and how your current habits impact your ability to reach other financial goals.
Budgets aren't set-it-and-forget-it, either. They'll grow alongside your family as your needs and goals change. You'll need a different budget when you're paying for childcare versus when your kids are in elementary school and you're starting to think about saving for college. Set a regular review schedule for your budget, including checkups when there's a significant change to your finances from events like career change or medical expenses.
Build your savings
Building savings habits is another essential step toward securing your finances. Consider your savings as a cushion that will help lessen the impact of significant life changes such as job loss, sending a kid to college or making the shift from earning to enjoying life in retirement.
You'll need an emergency fund to protect your family from life's financial curveballs. Aim to have 3 to 6 months of living expenses in the bank. Simple savings accounts make it easy to start building your rainy day fund with small, attainable goals.
Saving for retirement and educational goals are also important financial habits to build. Once you establish how much you want to save for retirement or education, you can open the right kind of savings account. There are several different types of retirement and educational savings accounts, and the earlier you start saving, the more time your money has to grow.
Like your budget, your savings strategy can grow with you over time and help you save more or less, depending on your needs.
Rein in your debt
Positive money habits include managing debt. Remember, the more money you're putting toward debt, the less you can put toward savings. The longer you carry debt, the more you'll pay in interest, which takes even more money away from your financial goals.
Use your budget to organize your debt and set a strategy for paying it down. Consider the debt snowball method to pay down your debts in the order of highest to the lowest interest rate. As your overall debt decreases, you can increase your savings. This will help prevent you from having to tap into your credit to make up for cash shortfalls.
Minimizing your debt is also important to your credit score. Keeping your overall debt low shows lenders you can live within your means, making you a better lending risk. Lower debt and a higher credit score can also decrease the amount of interest you pay on major purchases for your family, like a home or car.
Building positive money habits is all about protecting your family's future. Through strategies like education, budgeting, savings and debt management, you can create spending and savings habits that keep your family's goals within reach, even when life sends along unexpected events.
A few financial insights for your life
This information is provided for educational purposes only and should not be relied on or interpreted as accounting, financial planning, investment, legal or tax advice. First Citizens Bank (or its affiliates) neither endorses nor guarantees this information, and encourages you to consult a professional for advice applicable to your specific situation.