5 Financial Priorities You Need Right Now
Saturday, December 24, 2016, 6:00 AM | Leave Comment
Being young is hard enough when you are trying to pay bills. Being a parent is an additional burden that could send you deeper into financial distress.
Avoid many of the mistakes that young parents make when they start out.
Learn the 5 priorities you need to maintain good finances.
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Home Repairs and Maintenance
Home repairs are expensive and can creep up on you. Make sure you’re setting aside some money every month towards your next repair job.
It is difficult to start your day when your water or electricity stops working. Get maintenance checkups every to avoid any surprises.
Check the air conditioning unit after summer ends, and check the heating system once winter ends.
Regular checkups can save you thousands in the long run. Money magazine also has 7 tips for saving money on home repairs that will help ease the pressure on your budget.
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Emergency Fund
Most Americans live paycheck to paycheck, and put emergencies on their Visa card if something unexpected happens.
It is recommended that every household carries at least 3 months of expenses in cash reserves (meaning investment savings don’t count).
The one exception to this is you may tap some of those reserves to pay off debts, but even in this case you should keep $1,000 on hand to avoid going right back into debt.
If you’re struggling to build up cash reserves or make progress on your household debts, you need a budget.
Consider intuitive tools such as everydollar to create a monthly budget to help get spending under control. Getting intentional about budgeting can have the same result as getting a 20% raise.
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Life Insurance
Level term-life insurance is an absolute necessity to take care of your family if something should happen to the primary bread-winner, God forbid.
The amount of insurance should equal ten times your annual income, more or less. Most policies also include small riders for your dependents that will cover expensive funeral costs if something were to happen to them.
Avoid gimmick return of premium or whole life plans, which can cost as much as 20 times as much for the same coverage. Avoid any insurance policy advertised as a financial investment.
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Home Security System
The safety of your family is non-negotiable. That being said, not all security solutions are created equal, and not all services are appropriate for every income category.
Some systems will find ways to nickel and dime families and create an unnecessary drain on the budget.
Much the same protection can be achieved with an inexpensive ADT security system and a few easy DIY solutions.
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Debt Management
Debt is primarily a tool for buying now what you could be buying with cash if you were patient and planned ahead.
I know that sounds harsh, but it’s important that you begin to see debt as an income-sucking, freedom-wrecking drain on your financial future, and not as a tool that’s somehow going to help you.
It’s not helping you – it’s crushing you. Make a plan to pay off debts quickly so that you can get some traction and have margin in your life.
Even after nearly a decade of sustained economic recovery, the post-2008 economy is a tough place for young families.
We’re all having to find new ways to make our dollars stretch further.
We’re all at a different place financially, and some of us may have some ground to cover before we can get serious about retirement saving and wealth-building.
But regardless of where you are in your financial journey, these five priorities should be an urgent investment to secure safety and prosperity for your future.
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