It is essential to build up savings for the family, and the pandemic showed everyone just how crucial this is. A crisis can arise unexpectedly, and the family must be prepared with enough funds to face it. For instance, a study by the Pew Research Center in January 2021 among 10,334 adults across the United States showed that 44 percent lost some income in their household during the pandemic.
This was due to at least one family member losing a job or getting a pay cut. In such times, families rely on their savings to see them through. Furthermore, parents must prepare for their retirement. The study showed that 29 percent worry about not saving a sufficient amount for their retirement fund.
If you are trying to save up, do note that this does not mean cutting off expenses beyond the basics like food. Some expenditures will save you money in the long run. You must be able to recognize what these beneficial expenditures are.
Credit and Mortgage
If you are still renting, work to increase your household income so that you can afford to buy a house. The most basic one that fits your family will do. The monthly mortgage payments will most likely be higher than your monthly rent, but it will be an investment toward owning the house. As a renter, you are just contributing to your landlord’s wealth.
While you are preparing to do that, join a credit union. These are like banks, but the owners are the members themselves. There are various types of credit unions, and you will find one where you qualify to join. For example, credit unions for residents of specific counties or cities or federal credit unions accept all U.S. citizens aged 18 and older. There are military credit unions that do not require you to be in the service or a veteran to join. There are also credit unions for certain professions, like teachers, and ones for universities or certain churches.
It is better to join a credit union than use the services of a bank because when you are ready to buy a house, you can get a mortgage at an interest rate lower than those offered by banks and other loan service providers. They will finance up to 100 percent of the cost of the home with no down payment and no requirement for mortgage insurance. They will also refund 20 percent of real estate commissions in cash.
If you have a credit card, you can use it to help manage your cash flow, but you must spend only what you can pay for in full when it comes due. By sticking to this system, you get the advantage of purchasing something the family needs before your next paycheck, but you will not have to pay interest on it.
Once you have a home, get home insurance even if the credit union does not require it. The highest coverage you can get is called a guaranteed replacement value policy. This means that if your home and its contents are damaged by fire or natural disasters, you will get an amount equivalent to the cost of rebuilding and refurnishing your home. The higher monthly outlay is worth it because otherwise, you will not have enough to rebuild. Shop around to get the lowest rates because insurance companies vary in their charges. You must also research the company’s reliability based on feedback from its other clients.
Some factors affect the cost of your insurance, and you can take steps to benefit from these. For instance, build a home made of steel and cement instead of wood because the latter has higher insurance costs due to high flammability. Do not add features that pose a potential danger, like a swimming pool or a trampoline, because these will add to your insurance rate.
Home Security and Preventive Maintenance
Your next priority is to install several alarm systems in your new home. You must have separate alarms for break-ins, smoke, carbon monoxide, flooding, freezing temperatures that can cause pipes to burst, and detection of water leaks with automatic shutoff. Make sure to regularly test all alarm systems for immediate repair if any of them is found to be faulty. The cost of installing and maintaining all these alarms is worth it because it will save you from losing more in a burglary, a fire, deadly carbon monoxide poisoning, a flood, and busted pipes.
Another expense that you must include in your budget is regular inspection and preventive maintenance of all your appliances and parts of the home. Well-maintained appliances work more efficiently and use less energy, resulting in savings on your power bill. They also last longer before needing replacement. Preventive home maintenance ensures that you fix any problem at once before it escalates into something more expensive to fix. Knowing where and how to spend your money is the key to financial management and savings.