How to Plan Better as the Financial Pillar of the Family?

Top Tips to Control Your Finances

Here are some easy tips and ideas for effective money management and financial planning.

Lay Out Your Financial Responsibilities

The first step of creating a robust financial plan is laying out your financial responsibilities. Consider making a list of your dependents, say your children, spouse, ageing parents, etc. Also, have a priority budget for your needs. Consider segregating your needs, such as education and health, from your wants and desires, such as eating out and travelling.

Have Some Savings

No financial foundation is built without having a robust and consistent savings habit. It is often suggested that you set aside at least 20% to 30% of your income as savings. You may adjust it based on your life goals.

As important as it is to have savings, having them in separate, well-defined buckets can be rather helpful. Here’s how:

• Bucket 1: Emergency Fund
  Be it a sudden job loss situation like Arjun's, or any medical emergency, unexpected emergencies hit the sole earner. This is why it is important to have an emergency fund of at least 5% of your monthly income. This ensures you have at least 6 to 8 months of expenses if things go south. Consider investing in highly liquid funds for this purpose.
• Bucket 2: For Short-Term Goals
  Allocate another 5% to short-term needs, like education, buying a car, home upgrade, loan repayment, etc.
• Bucket 3: For Wealth Creation
  Do not forget to allocate a portion of your income to long-term objectives and wealth creation. You may use investment options that suit your preferences and risk appetite.

Build a Layered Shield of Insurance

Next in your list of building a financial plan should be having the right insurance. Imagine Arjun's parents falling sick amidst his job loss; this could have taken a big toll on his expenses.

For situations like this, it is advised to be better prepared. Consider having a health plan for yourself and each member of your family. Or you may choose the whole family insurance with family floater plans.

Also, plan for situations when you're no longer around. Being a financial pillar of the family, you may handle major things in your presence. But what if something happens to you? Who should your family rely on? What about their living expenses or lifestyle? Here comes the simplest and most affordable form of life insurance, called term insurance.

If you wish to combine savings and insurance coverage, then there are other options such as endowment plans, Unit Linked Insurance Plans, money-back plans, child plans, retirement plans, etc. With the financial net of the right insurance, your kids can pursue their desired education, the family can settle debts, and they don't have to struggle financially.

Track Your Monthly Cash Flow

You might think you have your finances sorted in your head. But let's be real, tracking your finances practically is important. You may use several tools to track and organise your monthly cash flow. Have a list of your EMIs, investments, and organise them into different labels like savings, fixed needs, etc. This ensures accountability and eliminates the surprise element in your finances.

Make Clear Financial Rules

Have simple but strict financial rules for your financial decisions. This ensures your decisions are not solely based on emotions. For instance, in case of a bonus, segregate half of it for a savings bucket while the other half can be used for regular spending. Additionally, in case of an accident, access the emergency funds; alternatively, for planned expenses, choose short-term funds.

Let Your Finances Grow as You Evolve

To make your financial planning more advanced, consider maturing your finances too. For instance, in case you complete a milestone, such as fulfilling a long-term goal, you advance your portfolio. This can be in terms of risk mitigation, portfolio diversification, allocation of assets, and so on.

Do Not Forget the Retirement Planning

As a financial pillar or breadwinner of the family, it is quite common that individuals undermine their retirement planning. However, that shouldn't be the case. In fact, having a retirement plan ensures you're financially independent in your life even when you're no longer working.

Final Word

If you're the financial backbone of your family, you're a hero with lots of love but lots of responsibilities at the same time. To ensure things are under control, have a financial plan ready. Have clear financial goals, set investments, and life insurance plans ready for your family. With Jio Insurance Broking, you can further compare these plans, check their benefits, costs, and features to see which one best suits your needs.

Choose safety and security with Jio Insurance Broking for your family and yourself.