Tips To Manage Family Expenses For Better Money Management
The term “Sandwich generation” has been coined to refer to middle-aged individuals who have to support both ageing parents and growing children. Juggling the roles as primary caregivers to both old parents and kids can be a very daunting task. Shouldering these responsibilities can be made slightly easier with money management, saving and budgeting.
Financial planning is key to minimizing the stress and anxiety that can cause the sandwich generation to crumble under the weight of their numerous responsibilities. The biggest danger while taking on the role of a primary caregiver is neglecting your well-being and financial goals while taking care of everybody else. With early planning and smart money management, one can protect their emotional and financial health while providing support for loved ones. These budgeting tips can help in balancing finances and achieving family financial goals.
1. Make a family budget
A budget reveals your current financial position and allows you to make informed financial decisions. This will help fine-tune your daily expenses and manage juggling multiple costs simultaneously. Monthly budgeting will help keep a tight lid on discretionary expenses and help cut corners to increase your monthly savings. Budgeting and savings go hand in hand. Making a family budget is the first step to ensure you are never in the dark about your finances.
2. Have a diversified investment portfolio
Investing your money is the next step towards taking charge of your financial security. In today’s world, it isn’t enough to earn money, it is very critical to make your hard-earned money work for you. Mutual funds, fixed deposits, stocks, recurring deposits are some of the popular investment options available. Since there are so many varied investment vehicles, it is natural to feel overwhelmed. Before investing, carefully assess your goals and targets you want to achieve. With the right mix of equity and debt funds, you can focus on achieving critical life goals like children’s education, marriage, and your retirement.
3. Get health insurance
In times of a global pandemic, a lot of factors can derail your financial stability. Medical inflation rates are at an all-time high. Failing to hold an adequate health cover can derail the most solid financial plans and result in wiping out all your savings. Healthcare expenses for senior citizens are particularly high. To safeguard your finances and your family’s healthcare, availing health insurance is an absolute must. One can opt for a family floater plan which offers coverage to all the family members, including aged parents. It is also advisable to avail a critical illness plan along with the family plan, which offers a lump-sum amount upon diagnosis of a critical ailment.
4. Set up an emergency corpus
Emergency corpus helps to financially manage a loss of a job, medical emergency, or any other contingency. Additionally, it can help save tax, be a steppingstone to learning mutual funds, increase return on your investment portfolio and help with financial planning to safeguard your family’s future. Corpus size can be anywhere between 3 months to 18 months. The corpus size should be determined by the overall financial situation, age, health insurance status, stability of employment. In general, 6 months size of the corpus is ideal for a family with stable finances. An emergency corpus will give you confidence in your finances and help support your family members in times of need.
5. Review long-term care options for your parents
It is important to plan for your parent’s future medical needs. As inflation rates are at a constant high, one needs to properly plan to take care of their ageing parents’ needs. For people above the age of 65, there is a big chance they would require extensive medical attention and in-home care. Insurance is one of the ways you can fund your parent’s long-term care. As insurance premium increases with age, one can also pre-plan a sustainable retirement income plan for their parents so that their pension can also partially support the medical costs. It is important to empower your ageing parents with all financial aids available at their disposal, and you can help them review their best possible options.
With systematic family financial planning, the Sandwich Generation can ease some of the burdens of their financial obligations and not feel so overwhelmed with the multiple responsibilities challenging them at every step of the way. Early planning is key to reducing financial stress and help cope with the demands of kids and ageing parents. So start planning for a better future and head to Digibank to explore investment and savings opportunities.