Let’s face it, every family goes through several stages of life, and unexpected events always emerge down the road. Creating a comprehensive financial plan for your family can ensure that no matter the circumstances, you will have a sense of control and can achieve family goals.
For instance, if you are a newlywed, you and your spouse might plan for a honeymoon and dream of building a house together. But if you’re middle-aged, you might want to have a retirement plan or are thinking about saving money for tuition fees for your children. Or maybe you have an aging parent in your family that has been recently diagnosed with a terminal illness. Irrespective of your unique family situation, having a strong financial plan will ease your stress and help you stay solid on financial grounds.
Moreover, family financial planning serves as a roadmap. It can help you manage your money, set a realistic financial budget, pay off your debts, and save some cash for emergencies. So, create a financial plan for your household to stay on top of your finances.
Not sure where to start and what to include in your financial plan? Don’t fret. We’ve drafted a list of a few simple tips to create a solid financial plan for your family:
1. Determine your goals
Any sort of planning is incomplete without defining the goals. Keep in mind that goals will differ from family to family. For example, for some families, financial goals may include saving cash for retirement, while for others, it may be paying off debts.
Although you must set goals based on your finances, there are times when you might need more money for urgent situations. In such scenarios, consider taking a loan and fulfilling your financial goals and dreams.
However, note that loan regulations and laws vary from country to country. For instance, the borrower must provide detailed information to the lender in New Zealand. So, before searching “Easy & low rate personal loans NZ” on Google, check the regulations.
2. Prepare a family budget
Surely, you don’t wish to run out of money due to overspending. For this reason, preparing a robust budget for your family is a must.
Your budget will set the foundation for your family’s future and keep you on track. With a strict budget, you will live within your means and cut unnecessary expenses.
A better tip is to establish a budget that you and your family can comfortably manage and sustain. Only then can you stick to it.
3. Tackle your debts
Answer this. How much debt do you have to pay off, exactly? What is its interest rate, and when must it be paid off? In the present times, the majority of us are paying off debts of some kind. Therefore, your family’s financial plan must include all the debts you and your family need to repay.
A viable approach is to repay high-interest debts first and then low-interest ones. However, consider different ways to speed up the repayment process when you have multiple debts. For instance, you can consolidate them to reduce the interest rate.
4. List down expenses and income
All your budgeting and goal-setting will fall by the wayside if you don’t determine all your earnings and expenses.
List each upcoming paycheck for the month. Don’t forget to add any extra income, for instance, the income you receive from a side business. If you have irregular income, don’t worry. Just take a peek at how much you have made in the last few months.
Once you have figured out how much money is coming in, your next step must be determining how much is going out. For this, make a list of expenses, including bills, utilities, shopping splurges, monthly subscriptions, etc.
5. Ease your worries by investing in insurance
The future is indeed unpredictable. So, the least you can do to keep your loved ones secure in challenging times is invest in insurance policies.
You can choose to add different types of insurance to your financial plan. For example, health insurance can cover your and your loved ones’ medical needs. This coverage is crucial when any of you gets severely injured or ill. Other insurances you may consider can include disability insurance, vehicle insurance, life insurance, etc.
6. Don’t forget an emergency fund
Most experts advise people to set aside money in an emergency fund for rainy days. This tip should be your utmost priority when devising the financial strategy for your family. After all, you never know when you or your family may suffer an unexpected crisis. Anything could happen, for example, job loss, medical emergency, home improvement project, etc.
So, avoid debt by setting aside money for unforeseen expenses. Having three to six months’ essential living costs saved in your emergency fund account makes sense. Also, make sure your emergency account is easy-to-access.
7. Seek professional help, if necessary
Although you can create a financial plan for your family all by yourself, seeking help from a professional financial advisor has several benefits.
These professionals have years of relevant experience and proper knowledge to guide you on the right path. A financial advisor will review your financial situation, including income, expenses, investments, savings, etc. That way, they can identify any loopholes in your plan and recommend the best strategies.
However, know that a financial advisor will charge you for their services. So, deciding whether to take help depends on an individual’s needs.
8. Track your finances
Financial planning is not a one-and-done type of thing. With time, the situation may change. For example, your family may grow, your income may increase or decrease, the condition of your debts and savings may vary, and more.
Therefore, you must review your financial plans regularly to identify if there are any issues or if you need to make any necessary amendments. The tracking process will also help you learn whether you are moving in the right direction to achieve your goals and reach financial stability.
Conclusion
It’s no secret that the majority of family problems are monetary. Most household disputes revolve around the shortage of enough finances, money theft, unequal financial spending, etc. Therefore, every family should create a financial plan to avoid family financial issues.
And while it can be challenging enough to manage your finances. But things might get even more challenging when you add your entire household’s financial affairs to the mix. But it isn’t impossible. With proper attention and deliberate care, you can make a financial plan that works best for each family member.
Lastly, it’s relevant to note that financial plans are not something set in stone. You can update them with the necessary changes after periodically reviewing them.
