Family income might change due to numerous factors. To avoid these situations, you can revisit and review the budgetary chart regularly where you can make these changes so that it keeps updated.
A Beginner’s Way to Make Financial Family Planning Strategically
The rise in different employment opportunities has led to the relevance of family income planning for many Indians. The earlier you start, the better it is to achieve a balanced and focused financial standing based on family income. Financial family planning makes it easier to achieve those goals and follow a strategic plan set ahead from the beginning.
Putting down necessary and long-term plans based on family income and budget nature are the vital points for this. Creating it is not hard if you follow the correct points and pay more attention to your necessities.
7 Easy Tips for Family Income Planning
1. Check Family Income
The basis of starting financial planning is focusing on family income. Keep an eye on your financial capacity and plan the family budget chart likewise. Note these steps as you move ahead.
Step 1: Add up the various income amounts.
Step 2: Make a list of your monthly expenses with suitable subheadings.
Step 3: Deduct the total monthly expense from the total monthly income.
Step 4: See if you have any pending debts or loans to clear.
Step 5: Leave a certain amount for the emergency fund.
Step 6: Note the balance amount.
You have the option to utilise this balance amount in your savings or invest in it. Saving is an important factor; hence, with age, your necessary expenses will increase when you can use this bulk amount for expenses. Making retirement plans from the beginning is needed in this scenario.
2. Set Your Financial Goals
Another vital aspect while working on financial planning is setting specific aims for the future. Make sure if those are short-term or long-term goals.
Long-term goals can be:
- Educational planning
- Retirement savings
- Any big loan savings, such as home loan, house renovation loan, etc.
- Other plans as big trip travel expenses, etc.
Short-term plans include:
- Marriage plans
- Small loans such as car loans, etc.
These are some examples of the many aims that you might have, but don't forget to include them in the financial planning.
3. Create a Budget Limit
It is normal to have certain monthly expenses from the total family income. This might vary from family to family, depending on various factors. Financial planning for low-income and average families has different levels of differences. Hence the budget limit depends on the following factors:
- Monthly Expenses: This fall under one of the vital necessities, which can be changed accordingly based on the financial picture of that month.
- Emergency Fund: Urgent scenarios can arise anytime demanding immediate financial action. Avoid these situations by having a strong financial ground by saving money separately for emergency purposes.
- Family Size: Nuclear and joint families have differing expense stature. Joint families might require a detailed division because here the household income comes into a bigger perspective. Whereas for nuclear families only the necessary expense nature can be focused on.
4. Update the Family Budgetary Chart Timely
This includes the family income of all the members above 15 years in the household. Such as:
- Salary of every individual
- Freelance income
- Profits on asset sales
- Pending debts
- Pension money
- Rental income (if any)
These major elements influence family income planning, and hence timely updates of the budgetary chart is necessary in this case.
Different situations might arise in this case where updating the financial chart regularly will keep things in place.
5. Decide on Ways to Save
Saving is the most effective way to ensure strong financial grounding in future. Hence, before spending money on something, these points should be noted:
- Follow the 50/30/20 Rule- This is a simpler and methodical rule to follow. Here you can spend 50% of the total monthly income on necessities. The 30% goes to spending on things excluding necessities such as clothing, occasional outings etc. The rest of the 20% goes to savings.
- Reduce Overspending- Whether it is your first month's salary or a little bit more additional balance than usual, overspending is a crucial urge to look out for. Proceed to buy something depending on its level of necessity.
- Create Short-Term Goals- If you notice that there can be extra expenses in a month, make a short-term goal you can utilize.
- Drop it in the Emergency Fund- The best way to use these savings is to put them in the emergency fund. This way, you can have enough money whenever necessary.
These are some of the tips to save, but you can always customise it your way and find one that suits your budgetary chart.
6. Research on Investment Options
A better option to increase the amount of money is opting for investing it on different platforms such as:
- Public Provident Fund (PPF) - If you are saving for requirement purposes, then this is the most beneficial way to save money. You can have returns risk-free, and you can also go for long-term plans. Moreover, the security level is high since it is a government-based procedure.
- Fixed Deposit- In this case, you can save a certain amount of money for a specific period in the bank on a given interest. This is another effective option to choose from because here, you can get assured money back after the end of the tenure.
- Stock Market- Investing in the stock market is beneficial if you have enough knowledge of it and its functions. Investment gains are a big pro in this regard.
7. Opt for Other Ways
These are not the only ways to utilise household income in making a budgetary chart. Other methods include:
- Practise money management
- List out tax benefits
- Get expert advice
There are many such investment options you can apply such as mutual funds, government bonds etc. Search further to see whether these options match your eligibility criteria before going for them.
The above ways offer a rough idea of the governing factors while making a budgetary chart for the family. Saving and investing are key ways to keep in mind as you financially plan for the family. Optimising these as per your criteria will help in making the right financial family planning.
FAQS About Family Income Planning
Long-term financial planning ensures that your future goals remain intact financially. Short-term financial planning is mostly used when you're opting for small loans, paying debts etc. While it is feasible to have long-term financial family plans, it depends on different factors that’ll go in sync with your situation.
The best time to begin the planning is when you think you have an adequate amount to contribute financially to your family. It can be when you get your first job, and you're starting to save, if you're making marriage plans, choosing to adopt a child as a single parent etc.
Money spent on routine things like groceries, general expenses, rent (if applicable), medicine and doctor appointments, pet essentials etc., falls in the category of setting the budget.
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