All families need to meet certain goals. Parents must make sure children have access to food and clothing as well as a roof over their heads and proper schooling. Many parents also have long term goals for their children. They want them to have a good education that enables them to join the workforce once they grown up. They may also want to provide their child with funds to go to college. In between parents need to save money for their own personal financial goals including saving money to buy a house and retirement. Saving money is a crucial part of any family budget. Parents may feel overwhelmed with the task in front of them. However, fortunately there are lots of ways to save money for their long term fiscal goals. Even small changes such as finding the cheapest auto insurance can pay off with big savings that add up over time.
Creating a Budget
All parents should begin by knowing what funds they have coming in and what funds are going out each paycheck. This means looking closely at their expenses. Knowing exactly how money each family has means knowing how money they have on hand. It also means knowing what bills must be paid and when. For example, each family should know how much they’re spending on rent or a mortgage and how much they’re spending on utility bills. They should also know how much money is going for things like food bills and clothing. A parent may realize they are spending needless money on things like a cup of coffee they can make at home for less money. A budget should include about ten percent extra each month. This helps the parent compensate for any sudden emergencies such as a car repair or emergency room bill.
Focusing on Goals
Once each parent knows what they are spending, they can determine what’s really important. Many parents have a vague set of goals but may not yet have thought about the longer term. Creating a one year, then five year and ten year plan can help them figure out where they want to be as they go through life. Saving long term should ideally be focused on specific goals. For example, a parent may want to save for a house in a given area. They may also want to save for a vacation for their wedding anniversary. Parents who keep these goals in mind can see how much progress they’ve made towards them on a weekly, monthly and annual basis. Activities such as looking at college costs right now can help the parent see exactly how much money they’ll need to save in the coming years. They also help the parent realize what is possible if they keep to plan and think carefully about the plan’s details.
Small and Large Changes
Changes, both big and small, can add up in the long term. For example, even saving five or ten dollars every single day can ultimately add up to thousands of dollars in savings over the course a year. Any parent should also look at larger changes that can also make an impact. For example, choosing to vacation nearby rather than taking a plane long distance means huge savings. The same is true of choosing a smaller home with a closer commute. It’s also important to husband any savings properly. Investing funds in stocks and bonds can pay off with interest. Over time, interest can add up to nice nest egg. Many stocks pay a quarterly dividend. This dividend is taxed at a lower rate than other forms of income, making it possible for families to save even more money as they get older.
While saving money appears to be a daunting task, in reality there are plenty of steps all families can take immediately. Starting right now will pay off long term.
