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How to Build a Family Financial Plan


Family financial planning can help you create a comprehensive strategy for managing your money as you move through different life stages. It starts with the basics – setting up a budget, paying down debt and saving – but a family financial plan can also include things like investing for retirement and setting aside money for college. Creating a long-term plan for your family finances is something you can do yourself but it’s also something you might need a financial advisor’s help with. Here’s more on how financial planning as a family works.

As you’re putting together a family financial plan, it can be helpful to engage the services of a financial advisor.

What Is Family Financial Planning?

Broadly speaking, financial planning means outlining specific goals you want to achieve with your money and outlining the steps you need to take to reach them. Financial planners are professionals who help people create a financial plan, then put it into action.

Family financial planning is all of the above, with a focus on specific scenarios that families may need to plan for. This type of financial planning accounts for the various ways marriage or having children can affect the way you manage your money.

Why Is Family Financial Planning Important?

Family financial planning is important for several reasons. Firstly, it allows you to create a roadmap for your financial future. By setting clear goals and creating a plan to achieve them, you’ll be better equipped to make informed decisions about your finances.

Additionally, family financial planning can help you to identify potential risks and opportunities. By reviewing your family’s financial situation regularly, you’ll be able to make adjustments to your plan as needed and take advantage of new opportunities that arise.

Finally, family financial planning can help ensure that everyone in your family is on the same page when it comes to finances. By involving your spouse, children, and other family members in the planning process, you’ll be able to create a shared vision for your financial future and work together towards common goals.

How to Create a Family Financial Plan

If you’re interested in creating a financial plan for your family, there are some key elements to include. As you get started with family financial planning, here are some of the most important areas to cover.

Budgeting and Spending

A budget is the cornerstone of any family financial plan. If you don’t have a family budget in place, it’s time to make one. You can easily do so using online budgeting software.

Tracking your spending regularly can help you fine-tune your budget and avoid overspending. There are plenty of budgeting apps that track expenses for you automatically.

As you track your spending month to month, revisit your budget to see if any adjustments are needed. Reducing spending in one area, for instance, can free up money that you can apply to one of your financial goals.

It’s also helpful to conduct an annual budget review to see how your spending has changed year over year. You can then use that as a guide for making your next year’s budget.

Debt Repayment

If you have debt, such as credit cards, student loans or a mortgage, those need to be accounted for in your family’s financial plan. Specifically, you need a plan and a timeline for repaying those debts.

When you have multiple debts, it can be helpful to prioritize them to decide which ones to pay off first. High-interest credit card debt, for example, may be worth putting at the top of the list if it’s costing you the most money in interest while your lower interest mortgage can wait.

When incorporating debt repayment into your family’s financial plan, think about what you could do to possibly accelerate the payoff. Refinancing student loans or a mortgage to a lower rate, for example, could allow you to make a larger dent in what you owe if more of your payments go to the principal each month.

Financial Goals

Family financial planning means thinking about what goals you want to achieve with your money. Those might include:

  • Saving $2 million for retirement
  • Paying off your mortgage by age 50
  • Setting aside $100,000 in college savings for your kids

Those are examples of long-term financial goals you might set. You may also have short- or mid-term goals in mind as well, such as saving $10,000 in your emergency fund or setting aside $5,000 for a vacation you want to take in a couple of years.

When setting financial goals as a family, remember to keep them realistic and specific. Set deadlines for reaching each goal and detail the steps you’ll need to take to reach them on time.

Retirement Planning

Parents teaching their children about saving and planning for retirement.

It’s never too soon to begin thinking about retirement, especially if you don’t want to be a financial burden to your children later. Start by looking at the resources you and your spouse or partner already have on hand.

For example, if you both work you may each be able to contribute to a 401(k) or similar plan at your job. If your employers offer a company matching contribution, a key part of your family financial plan may be maxing out your contributions each year or at least saving enough to get the full match.

You can also look at other ways to invest for retirement, such as a traditional or Roth individual retirement account. And of course, you should both be thinking about where Social Security benefits will fit into your financial picture once you’re ready to retire.

College Planning

Raising kids isn’t cheap, especially when you factor in the cost of college. Even if your children are still young, it’s good to think about college planning and what you can do to get a head start.

Opening a 529 college savings account or a Coverdell education savings account, for example, are two ways to save money for college on a tax-advantaged basis. Those can be helpful to have, even if you’re getting a late start on saving.

College planning discussions should also cover things like scholarships, grants, financial aid and student loans. As your kids get closer to college age, it’s also helpful to talk about affordability when it comes to school choice as well as what your expectations are regarding them contributing to their education costs with a part-time job.

Insurance Planning

Insurance is something you shouldn’t overlook when mapping out a family financial plan. While you might already insure your home and vehicles and you have health insurance at work, it’s also important to consider what you need with regard to life insurance.

Term life insurance, for example, can provide coverage for a set time period in case something happens to you or your spouse. Consider getting life insurance for each of you, even if one of you stays home and doesn’t work. Having life insurance in place can provide reassurance and a financial safety net if the worst happens.

Estate Planning

Having a young family doesn’t mean that you can put off thinking about estate planning. At the very least, it’s important to have a last will and testament in place. You and your spouse can use a will to determine who should inherit your assets and name a guardian for minor children.

You may want to set up a trust if you’ve already accumulated some significant assets. And you might want to consider whether you and your spouse should each have an advance healthcare directive and power of attorney in place in case of an emergency health situation.

Should You Use a Financial Advisor for Family Financial Planning?

While you could write your own family financial plan, there are some benefits to getting help from a financial advisor.

For example, a financial advisor can offer expertise and knowledge about things like investing or retirement planning that you may lack. They can also take a comprehensive view of your financial picture to spot any planning gaps that you’re overlooking.

If you decide to work with a financial advisor, be sure to ask if they’re fee-based or fee-only. Fee-based advisors may earn commissions for selling specific products, like annuities, to you while fee-only advisors charge only for services rendered.

Bottom Line

A financial advisor building a family financial plan with a client.

Family financial planning is something you should be giving thought to when you’re managing money for more than just yourself. Thinking long-term and planning ahead can increase your likelihood of being able to reach your financial goals.

Whether you choose to create a financial plan on your own or use an advisor, there’s no better time than the present to get started.

Tips for Family Financial Planning

  • Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
  • A free, easy-to-use budget calculator can be immensely helpful as you go about setting your family’s budget on solid ground.

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