When it comes to making preparations for the rest of your life, proper management of your money is an important skill.
However, it’s not one that comes easy to everyone. It’s easy to take it for granted that your parents have it all put together, but as their child you may be concerned that they’re not preparing enough for their retirement years.
Here are some quick and easy tips to teach your parents on how to manage their finances.
Perhaps the first step to proper money management is learning to save properly. Your parents may already be aware of this fact, but it’s important to really drive the point home.
In order to adequately prepare for retirement, CNN says an individual needs to save 10% to 15% of their yearly income in their 20s and 30s. By your 50s and 60s, you should have the equivalent of at least 6 times your annual salary saved. If your parents haven’t started on this, it’s best to talk them through it now, as saving for retirement should start sooner rather than later.
Keeping Track of Expenses
According to a report from Business Mirror, Filipinos lose track of an average of 42% of weekly expenses. The survey found that this roughly amounted to Php 54,000 of unaccounted for funds per year.
In order to help your parents avoid this trap, it’s important to help them keep track of their expenses. For parents who are technology-savvy, there are dozens of helpful budgeting apps that they can use to keep track of expenses. If they prefer a more traditional route, a logbook of expenses per week works just as well.
Investing in Health Insurance
Finally, one thing to do to help your parents keep their finances in shape as they grow older is to invest in a good health insurance plan. Their bodies and immune systems may have begun to weaken as part of the natural process of aging.
This means that their chances for hospitalization increase, which in turn means that their medical expenses will also increase. In order to avoid the trap of falling into debt due to out-of-pocket medical expenses, it’s important to find the right health insurance plan that’s tailored to your parents’ needs.
Paramount Direct has a helpful how-to guide for seniors looking for the right health insurance plan. This guide answers any questions the reader may have regarding the costs and coverage needed for seniors or retirees, helping you and your parents pick the right plan.
Another way to help your parents manage their funds is to encourage them to make investments. Instead of leaving all their savings in the bank, it may be helpful to invest a percentage in managed funds like mutual funds or UITFs.
These are both professionally managed funds managed by an expert fund manager so your parents won’t need to study it in detail. Doing so will ensure that their money grows, and lessens the negative effects of things like inflation.