Family life can be such a great experience. There are moments that you want to stay in forever, and laughter you never want to forget. Although times can be chaotic and rushed, family life is an important dynamic.
One of the biggest stresses for families is finances, unfortunately. You may find yourself distracted from precious time together by money worries. Saving money is an important habit to get into for many reasons. Let’s look at some of the main reasons you should start saving.
Building an emergency fund
An emergency fund is something that everyone should have regardless of their family situation. Everyone has had moments where cars need repairing suddenly, or a dishwasher breaks down and needs replacing. Those moments are stressful as you work out how much money you have available and how much you need to borrow.
Building an emergency fund can be simple. Work out how much you can afford to set aside each month and put it into a separate bank account. If you and your partner both do this, you will find it quickly adds up to a nice cushion for emergencies.
Reducing financial stress and avoiding debt
Debt is something that most UK families have. Regular saving can help to provide a cushion against debts. For example, buying a new dishwasher with your emergency fund prevents you from buying it on finance or taking out a payday loan.
If you have existing debt you can still save and pay off any creditors at the same time. Take a proper look at your finances and work out where all the money is owed. Prioritise higher-interest loans first to prevent you from paying more than is necessary. Debt consolidation loans are also an option to combine all your debts into one monthly payment to make things more manageable.
Teaching children financial responsibility
Schools in England are required to teach a certain level of financial responsibility in lessons such as PSHE and Maths. However, research shows this is not standardised and even teachers are confused about their responsibilities.
By demonstrating healthy financial habits at home, your children will be able to learn how to manage their money in the future. Pocket money, earning money for chores and managing their own birthday money are all great ways to get them involved and have a level of financial freedom from a young age.
Preparing for future goals and expenses
There are times in your life when you will have large financial goals. This could be saving for your children to go to university without loans, buying a family home or going on a special holiday.
Unless you win the lottery, these things are only achievable with a lot of savings or clever investment. One option is to set up a savings account in the name of your child if it is going to be for them. Opt for one with a higher interest rate and set up a direct debit from your account monthly. Even if it is £50 per month, this will equal £600 per year plus interest.