Family financial planning has arguably never been more important, and never as difficult as it is right now.
As many as 39% of the respondents said they felt it is the duty of every parent to save for their children, whilst 55% of the parents believe it is their duty but struggle with the obligation.
A further 14% of parents have genuine concerns they will not be able to leave any inheritance to the children, while one in 10 do not feel confident they will have any assets to leave their kids when they die.
Now, you need no reminding that the financial outlook has worsened for many families in the 12 months since the survey was conducted off the back of a cost-of-living crisis, which shows few signs of coming to an end anytime soon.
So, how exactly do you ‘succeed’ at family financial planning and save money in the latter part of 2022 and beyond? We don’t proclaim to have the answers – but we can set out the options that are available to you which can help you keep more money in your pocket now and provide some financial security for your family in the future.
Get to know your finances
The first step of all successful family financial planning is to analyse your finances to help you manage and control your cash.
At the moment, they’ll be plenty of people who are shying away from examining their spending, maybe a little worried about what they’re going to find. But it’s time to pull those heads out of the sand.
You’ll feel better for it, even if, for example, you discover that you’re spending more than you earn or that you’re dipping into your overdraft every month. It doesn’t need pointing out that this just isn’t sustainable.
Here are some tips for getting an accurate account of your monthly spend:
· Gather together all statements and receipts – instead of trying to make a good guess of what money is coming in against what’s going out, get all your statements and bills in front of you in black and white. That way, you’ll capture exactly where your cash is going.
· Don’t forget quarterly expenses – the amount of money you spend each month will differ. Now, with the rising cost of energy, it’s not easy to get a handle on what quarterly expenses such as gas and water bills are going to be moving forward – but you should at least benchmark from the previous three months.
· Be as accurate as possible with your figures – for most families, there are so many payments flying out of their account – from childcare costs to insurance premiums – it’s difficult to be exact with expenditure. So, set aside some proper time to crunch the numbers. There are free apps out there such as Mint that can break your monthly spending down for you into an easy-to-visualise pie chart.
· Include ‘one-off' spends – in your average month, you’re going to have your fair share of one-off spends, be it a holiday, birthday treat or a date night (remember them?). These need to be factored in, but it’s important to apportion the annual cost of these into monthly amounts. So, if your holiday costs £2,000 – over a year, that's £166.66 per month. So, you'd put £167 under "holiday" each month.
To understand your household budget, you can either go ‘old school’ with a spreadsheet or make use of modern apps. Personally, we’d recommend the latter, with apps such as Money Dashboard making it relatively easy to collate your current, savings and investment accounts in one place, with a view to reviewing your spending habits.
Learn how to stop spending
Around 9 in 10 (89%) adults in Great Britain report that their cost of living has increased, equal to around 46 million people, as per a recent ONS survey.
For those who had seen their cost of living go up, the most common lifestyle changes they had made as a result were:
● spending less on non-essentials (57%)
● using less gas and electricity in their home (51%)
● cutting back on non-essential journeys in their vehicle (42%)
These are fairly significant lifestyle changes. But you might also curb your spending with less drastic measures.
Top tip: don’t underestimate the money you can save from small changes to your lifestyle.
Cutting out your £3.50 weekday coffee could reduce your annual expenditure by more than £900. You might surprise yourself how little you actually miss it. Other non-essential spending could be nipped in the bud, too, such as unused (or under-used) subscriptions like the gym or Netflix, and limit luxuries like takeaways and shopping trips.
It might feel like you’re cutting out all the things you enjoy in life, but remember it’s unlikely to be forever. And, ultimately, it could enable you to think more long-term about your finances and help you plan towards greater financial security for your family.
Get financial security in the short term
At the end of the day, that sense of financial security is what all families want. But it can feel impossible when you barely have enough to cover your monthly outgoings, let alone save.
That’s where income protection and life insurance can really come into their own, giving you real peace of mind that your family is protected.
Without a steady income, would you be able to cover bills like your rent, mortgage or other living costs?
Income protection is a type of insurance designed to help you continue to meet your regular financial commitments if you are unable to work for an extended period of time.
If you can’t work because you’ve suffered an accident, become sick, or lost your job through no fault of your own, an income protection policy pays an agreed portion of your salary each month, while you recover and get back on your feet.
For the price of a Netflix subscription, you can ensure that your family is looked after financially in the event of your death.
Sorry for dropping the ‘D word’ in there – we won’t linger on it.
A life insurance policy can help:
· Make sure outstanding debt like a mortgage is manageable.
· Minimise stress during an already difficult time.
· Let your family maintain their lifestyle.
All this is possible without having to find tens or hundreds of pounds a month to build up some savings.
Life cover will offer you some peace of mind at a time when that’s in short supply. Speak to one of our experts who will help you understand how much a bespoke policy will cost you.
At QuoteSearch, we’re independent and FCA regulated, so you can proceed with trust. Even if you don’t follow through on a quote, your information will be securely stored, and is never shared without your permission.
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