Planning for Your Family’s Future: 4 Practical Tips from a Top Finance Expert

by | Apr 26, 2024 | Life

Let’s talk finances. Whether you’re planning for your child’s university fund, buying your first home or ensuring a comfortable retirement, understanding how to manage your money effectively is key to securing you’re a financially fit future for you and your family.

Put these 4 tips into action for wealth that lasts (and covers pretty much anything life throws your way):

1. Saving for University

Think of saving for your child’s time at university like planting a tree. The earlier you plant it, the stronger it grows, providing shade sooner.

Education is one of the greatest gifts you can provide for your children. Starting an education fund early can ease future financial burdens, allowing your children to focus on their studies rather than student debt. The timeline for this goal is non-negotiable—most children start their higher education by age 18 or 19, with the rare exception of those who may opt for a gap year.

READ MORE: How to Build Wealth for Life—Real Advice from Really Successful Guys

Unlike retirement, where you might delay your plans to accumulate more savings, the university start date doesn’t flex. Therefore, the earlier you begin saving, the less financial strain you’ll experience as tuition time approaches. Consider opening a tax-free savings account or investing in unit trusts to maximise growth. The goal? Start small, but start now. Remember, every bit helps when it comes to education.

Practical Tip: Automate your savings by setting up a monthly debit order that goes straight into a dedicated education fund. This ensures that saving for your child’s education becomes a seamless part of your budget.

2. Buying a Home

Buying a home is like setting the stage for a play; you need a solid foundation to support everything that happens next.

For many of us, buying a home is more than a purchase—it’s planting the roots for your family’s growth. Preparing your finances is crucial; this means improving your credit score, setting realistic savings goals, and understanding what you can truly afford.

Interest rate fluctuations can significantly affect your mortgage repayments, so it’s vital to choose a mortgage that doesn’t overextend your budget. Committing to a payment that’s too high can lead to financial strain, especially if interest rates rise. A good credit score and a solid down payment can significantly affect the terms of your loan, saving you thousands in the long run.

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Understanding your debt-to-income ratio is key when applying for a mortgage. Aim to keep your monthly repayments below a third of your net income to maintain financial comfort. Don’t forget the additional costs like transfer fees, conveyancer fees and the upkeep of your new home.

Practical Tip: Before applying for a mortgage, use online calculators to simulate different scenarios of interest rate changes. This helps you understand how fluctuations could impact your repayments.

3. Growing Your Retirement

Planning for retirement is like packing for a long trip; the better you prepare now, the more enjoyable and stress-free your journey will be.

While supporting your children’s dreams, don’t neglect your own future. Balancing saving for education with investing in your retirement is crucial. A Retirement Annuity (RA) can supplement your existing savings, ensuring you’re not solely reliant on your children later in life.

Practical Tip: Increase your retirement contributions by just 5-10% each year—this small change can significantly boost your retirement savings over time without heavily impacting your current lifestyle.

4. Plan Your Estate

Estate planning is akin to drawing a detailed map for your loved ones; it guides them on where to go and what to do when you’re no longer able to lead the way.

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Estate planning may not be the most exhilarating of topics, but it’s absolutely essential. It ensures that the wealth you accumulate over your lifetime benefits your children and grandchildren. From drafting a will to setting up a family trust, these steps protect your assets and provide for your loved ones after you’re gone.

Practical Tip: Regularly update your will and other estate documents whenever major life events occur (e.g., birth of a child, marriage, or divorce) to ensure they accurately reflect your current wishes and circumstances.

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Meet Justin Els

Justin Els is the director of TVC Wealth and Health Managers, a team of advisors with a passion for adventure, sport and fitness. Their focus is on helping clients integrate their finances as part of an active lifestyle. Get more info HERE.

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