Create a financially secure future for your loved ones with these five top tips

Financial security is a core part of long-term stability and growth for your family. As such, it can be particularly important to have a solid financial plan in place to help keep you on track.

Indeed, having a financial plan in place can help you:

• Build a stable future for your family
• Manage your income and expenses
• Balance your family’s current needs against their future requirements
• Reach your short- and long-term goals.

However, developing a financial plan can be a complicated matter, since you’ll likely have a variety of important factors to consider. You’ll also need to revise your plan over time as your family’s needs and circumstances change.

Here are five ways to create a family financial plan that can withstand the tests of time, as well as how your Financial Planner can help you.

1. Start by outlining your family’s goals

Your family’s financial plan should begin with your long-term goals, so you’ll want to outline what these are. They could include:

• Early retirement
• Achieving financial independence
• Buying or owning multiple properties
• Funding a secure life for your spouse and children.

Remember, we all perceive financial success differently, which could affect the goals you choose and how you set them.

Some may define success as having enough money to stop working, becoming a millionaire, owning a business, or supporting their family through their individual stages of life.

But, no matter how you picture your “I’ve made it” moment, you’ll need a strong financial plan to make your vision a reality. This is something we can help with.

1. Build a budget to reach your goals

The core of a family financial plan is knowing where your money is coming from and how much you’re spending each month.

A good monthly budget will help you balance your short-term spending priorities and ensure that you’re still saving appropriately for the future. Remember, a day-to-day budget is typically the base from which most sound long-term financial decisions are made.

An effective budget can help you:

• Prioritise your spending
• Ensure your wants don’t eclipse your needs
• Avoid going into unnecessary debt.

Your budget factors in your regular income and spending and can help you focus on which areas need the most attention. Using a clear budget, you can track your spending and see what your typical spending patterns are and where your money goes each month.

Then, you can cut back on spending in certain areas to meet your financial goals.

As new priorities emerge, whether it’s retirement savings, funding a child’s education, or buying a property, you can adjust your budget as needed.

1. Keep yourself and your family protected

Insurance is another important element in your family’s financial plan, and there are several types to choose from.

• Life insurance: A form of cover that can provide a payout to your loved ones in the event of your death.
• Critical illness cover: A type of insurance that may provide a lump sum if you are diagnosed with a serious illness or condition listed in your policy.
• Income protection: An insurance that can offer a regular, tax-free income if you become unable to work due to illness or injury.

Having the appropriate insurance in place for your circumstances can help you avoid having to take drastic measures, such as depleting your savings or withdrawing from investments.

Some types of cover, such as life insurance, are an important requirement if you have dependents who rely on you financially.

It can also be helpful to review your insurance at least once a year, or if your life circumstances change. This can ensure that your protection is always in line with your financial situation and requirements.

1. Focus on building your emergency fund

It can be easy to overlook an emergency fund, especially if you have a generous income. However, having an emergency fund can help prevent you from having to access these critical accounts, which could be detrimental to your long-term financial success.

Ideally, you want to have around 3 to 6 months’ worth of living expenses in an easily accessible account, depending on your circumstances.

Establishing an emergency fund can help your family pay for unexpected expenses such as medical emergencies or home repairs. It can also help if you lose your income, even temporarily.

Keep in mind, while insurance such as income protection can help with some emergencies, these types of cover often have a minimum deferment period, which can be at least four weeks or more. Your emergency fund could help cover the difference.

1. Revise your financial plan

It can be easy to make a plan and then not keep up to date with it as your life changes. And there is no doubt that it will change.

You’ll achieve some of your goals, perhaps change others, children will be born, and other family members may pass away. You could face unexpected financial hurdles like divorce or redundancy, as well as unforeseen opportunities to grow your wealth.

All of these changes mean that you need to adjust your family’s financial plan in response.

Even if the result of that regular review is simply a confirmation that you don’t need any changes right now, the review will keep you thinking about your financial plan and how you might need to adjust it over time.

Get in touch

Whether you’re a new or existing client here at PenLife, we can help you build and maintain a financial plan that suits the needs of your family.

If you’re just getting started in the world of financial planning, talk to us today for expert advice. If you’re an existing client, get in touch and let’s see if your portfolio needs a tune-up.

Email us at enquiries@pen-life.co.uk, or call 01904 661140.

Please note

This article is for general information only and does not constitute advice. The information is aimed at retail clients only.

All information is correct at the time of writing and is subject to change in the future.

The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.

Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.

Note that financial protection plans typically have no cash in value at any time and cover will cease at the end of the term. If premiums stop, then cover will lapse.

Cover is subject to terms and conditions and may have exclusions. Definitions of illnesses vary from product provider and will be explained within the policy documentation.