One way in which you can completely alter your family’s trajectory is to establish a financial safety net. Most families do not have savings set aside to pay for a sudden incident. Creating the habit of putting small values from each pay period into a savings account is the first step. But allowing that savings fund to build into a cushion that could prevent panic if you ever faced an emergency is where you and your family will find comfort.
In the privacy of your own household, it’s important to have open conversations about uncomfortable subjects. For generations, it was (and sometimes still is) taboo to discuss finances. This creates an invisible barrier in which your children are trapped and excluded from the opportunity to gain financial knowledge. Open discussion about money and other tough subjects allows you to teach your children, which will result in them operating confidently and responsibly with their money as an adult.
Don’t Use Credit
While touted as the solution to your money woes, credit is oftentimes the bane of your finances. The dependency cycle on credit is hard to reverse. When you use credit, you must pay for things you already bought with your current income. The trouble arises when today’s income isn’t enough to cover today’s needs in addition to the prior ones. If you never enter into this backward cycle, you won’t have to struggle to break it.
Being conscious of your purchases, practicing frugality, and using coupons may help extend your cash flow, but it won’t make you wealthy. Take the time to learn about and begin investing. Diversification, minimum requirements, and other potential benefits are important for you to know. Invest your money consistently over long periods and your childrens’ lives will be forever altered.
Spend Time, Not Money
One misconception is that you need to spend money to have fun together or that you should buy fancy things to make you happy. Both of these assumptions are completely false. Studies have found that people are happier spending quality time with those they love. Look for free, fun ways you can spend undistracted time with your family and children.
Appearing Rich is Not the Same
We all love designer clothes, fancy meals, and dreams of extravagant vacations. However, it’s important to realize we can choose to appear rich by spending money in this way OR we can maintain a seemingly low-key lifestyle and invest our excess income to build wealth. For everyone except the top 1%, this choice is a must.
A Holistic Perspective
It’s just as important to look for ways to save on life’s largest expenses like housing and medical expenses as it is to try to find discounts on life’s daily expenses like food, clothing, and transportation. Having an all-encompassing perspective instead of a narrow focus is the best approach to maintaining healthy, wealth building finances.
Change is Inevitable
The world is in a constant state of change and this is out of our control. What we can control are our behaviors with our money and the level of education and communication we exchange with others. When you choose to make wealth-building choices and educate your family about what you’ve learned, you set the stage for their success.
Need more guidance on planning your family’s future? Do sign up and our financial advisors will help you out. Or call us on 0773488422.