Important Personal Finance Tips For Parents

There is no doubt that investing is a wonderful habit to imbibe . . .

There is no doubt that investing is a wonderful habit to imbibe. However, for the adult with responsibilities, there are often so many financial requirements demanding a share of the same source.

For the parent, these financial requirements or responsibilities are even more demanding. From worrying about the rising cost of education, health covering for both the kids and parents, and even planning for future costs, saving or investing might seem like a luxury.

However, with proper planning/budgeting, as well as a good strategy, you would be able to surmount all financial challenges and attain financial freedom. Here are some of the tips to bear in mind.

Set Goals And Strategies

The first step to any process is determining the expected end and then working out a well thought-out plan to achieve it. Set financial goals that are time bound to cover short term periods as well as long term periods.

The best kinds of goals to set are S.M.A.R.T goals. The acronym stands for specific, measurable, actionable, realistic and time-bound. When the goal has been set, the next step is to determine how to get there.

Laying strategies in place gives you a clear map to your goals. While they may not always follow, they generally make the process easier.

Budget

The financial strategy here might just be a budget. This budget can be as basic as calculating all your expected income and subtracting all the possible necessary expenses for the period. Set daily or weekly spending budgets.

While it is normal to veer off every now and then, a budget keeps you accountable. Budget for household expenses, entertainment costs, feeding expenses, and so on. Make a budget and stick to it.

Spend Less Money Than You Earn

To have spare money, you need to be able to spend less money than you make. This might seem only logical, but it can be very tough to follow through. The portion left that doesn’t go into expenditure is what goes into savings and investments.

For this, you might need to cut off unplanned spending or even have a percentage of your income deducted at source.

Define Your Financial Priorities

In this part of the world, the society script is usually to go to school, get married, buy a car, and build a house. These are the things that the typical individual wants to explore. The challenge is that this process is not for everybody.

For example, while a house of your own is necessary, it doesn’t make sense to sacrifice giving your children the best education possible just because you want to say you have your own home. Until you can afford it conveniently, a house project can leave you in debt, empty your purses, and leave you financially constrained.

Depending on where you are on your financial journey, define your priorities and relegate everything else to the background.

Save Specifically

There is nothing wrong with saving for saving sakes, but when you save specifically, you reduce your chances of defaulting by a whole lot. Save for your children’s education especially if you want them to have the best you can afford; save for your retirement; save for big projects, and save for contingencies.

Prepare For Contingencies

Preparing for contingencies involves creating a buffer fund or an emergency fund or most preferably, having insurance. From home insurance to car insurance and health insurance, having a company ready to cover emergencies is a luxury that you should be able to afford.

You would never know how much your health insurance is saving for you until you have to pay for hospital bills out of your pocket. In terms of building a rainy day fund, understand that losses can occur anytime. It could be the loss of a job or an unplanned accident; you might never be too prepared but you are better off with a level of preparation.

Invest

Finally, and most importantly, it is normal to get bothered by the weight of all the responsibilities. However, investment is the only thing on this list that actually adds to your income. To build wealth, it is important to have multiple sources of income and investing is an amazing option.

For one, the gains from investing in the Nigerian stock market for the long term can surprise you years down the line when the cost of the investment has been long forgotten. And with the other tips being followed, making out funds to invest would not be so tough.

Written by Lawretta Egba.