FINANCIAL PLANNING IS PART OF THE SOLUTION TO FINANCIAL SECURITY. For many families, issues of personal finance become the most prominent when there is not enough money to pay bills. And yet, handling one’s personal finances when money is less problematic can equate to more security when emergencies or unforeseeable circumstances do arise. The basic points of personal finance do revolve around how much money is coming in and how much money needs to be spent.
When looking to the future a number of questions should be asked to estimate the financial demands that are on the horizon so that one is not continuously handling emergencies of major dental bills, or the necessity to replace a major appliance, all in addition to much longer term planning.
Financial Questions You Need to Ask for Your Family’s Future
In terms of budgeting and managing long-term personal finance, here are a number of questions that are designed to ensure that your financial needs are being considered:
♦ How much money will your family needed for monthly and annual expenses? (For example, food, rent/mortgage, utilities, all bills, etc.). Personal financial decisions may involve paying for education, financing durable goods such as real estate and cars, buying insurance, e.g. health and property insurance, investing and saving for retirement. Be sure to consider every possible financial requirement that you have already incurred and may need to consider.
♦ Where will this money come from, and how?
♦ Are you living on a financial edge where any emergency will jeopardize the security of your family?
♦ If so, what options are available to make more money and/or lower your costs?
♦ How can your family protect itself against unforeseen personal events, as well as those in the external economy? (More savings? More insurance? Investments?)
♦ If you have built up some assets over time, how can your family’s assets best be transferred across generations (bequests and inheritance)?
♦ How does tax policy (tax subsidies or penalties) affect your personal finances? (You may need an accountant to fully flesh this out, but it needs to be including in your personal financial planning).
♦ How does credit affect your family’s financial standing? Are you over your head in debt? Or are you using credit for the purpose of building a future, such as by buying a house or building a business?
♦ How would the temporary loss of income effect your family’s financial stability?
It may be uncomfortable to consider some of these questions, but planning for emergencies and/or confronting that more money is needed and/or a reduction in lifestyle (even if temporary) is required, is nevertheless better than simply hoping that it would never occur to your family.