Playstore Icon
Download Jar App

What is a Family Financial Plan, and How Should You Create One That Works for You

Team Jar
December 13, 2022
What is a Family Financial Plan, and How Should You Create One That Works for You

Planning to start a family? Here’s why it’s important that you create a family financial plan first and then start the next chapter of your life, comfortably and stress-free.

As adults, we often become complacent when we start earning a steady salary because we've finally become financially independent.

In most cases, you can buy something you've always wanted, you get to pamper yourself and have no one question you about it, and so on.

But we don't realize that this newly found financial independence will not be sustainable if you continue to live without a financial plan or a budget.

A financial plan and savings are important if you're single, married, or with a family. 

It's never too late to start your financial planning and budgeting journey.

This way, you can park money for your future while leading a comfortable life.

This may not seem like a big deal when you are single, and there are no added responsibilities.

But once you have reached a stage in your life when you have a family to think of, financial planning makes life much easier.

A little time and effort will go a long way for you and your family. Here's what you need to do to help you plan the financial future for your family in the best way : 

Make a Budget 

Setting up a budget for your expenses and giving money the highest priority possible is the first step in planning your future for you and your family.

Make a list of all your monthly purchases, highlighting those that seem exorbitant or detract significantly from your budget.

You will be able to learn one of the most crucial financial lessons of all in this manner: maintaining a decent budget is the greatest method to avoid becoming bankrupt.

Set your rent, petrol, food, travel, and family expenses as top priorities among your monthly expenditure. Because they are your essentials and will always cost money each month, be sure you're not compromising on them.

The most crucial thing is to discuss your financial situation with your partner and other people involved.

Determine together what you think you should be compromising and what you want to be able to afford in the future.

Always remember that they are also affected, and involving them in your family's financial decision-making will help everyone understand how and why they can contribute.

Set your Financial Goals 

Setting financial goals is very important when you are financially independent, so you can maintain your finances once you're married and start your family.

It is best to sit with your partner and discuss your financial goals.

You will have short-term goals and long-term goals.

Short-term goals will include milestones you want to achieve in the next 2 to 3 years. It can include buying a car, clearing your debts, or traveling.

Long-term goals include saving up for college for your kids or buying a house.

Once you and your family understand your financial goals, it becomes easier for you to continue with financial planning or budgeting.

Once you have a clear idea about your and your partner's goals, you must consider different ways to grow your money.

You can choose to put your money in a savings account that gives more returns or invest in the stock market.

If you feel like you do not have enough knowledge about investing, you should consider taking the help of an expert. 

Long-Term Investments 

We often get so carried away with our daily lives that we forget the importance of saving for long-term goals.

Long-term goals are usually things you would want to achieve at a later stage in your life. These goals include saving money to buy a house, setting up a retirement fund, or saving up for your children's education.

Long-term investments need not grow at a fast rate, but it should grow consistently.

Short-term goals might require you to be able to withdraw liquid funds, whereas long-term goals don't necessarily have to be liquid investments.

Long-term investments play a vital role in your family's financial plan as you prepare for big and significant events in the future.

Investing in insurance will also count as a long-term investment. 

Invest in Insurances 

Investing in an insurance plan is the best way to keep you and your family secure.

Educate yourself about the pros of having insurance and choose the plan wisely.

There are multiple health insurance and life insurance options to choose from.

The hard part is choosing which plan suits you the best.

Keeping your long-term goals and budgeting in mind, you can select your family plan accordingly.

If you have trouble with numbers or understanding the things to keep in mind, you can take the help of an expert or an insurance agent.

Educate yourself on the right questions to ask when getting someone's help.

A life insurance policy can keep your family safe and secure in a worst-case scenario.

Health insurance will cover the hospital charges for you and your loved ones in the case of an emergency. This way, you won't have to dip into your savings.

Try to Become Debt-Free

The first thing to do is pay off any debts that are still due because the interest you pay on loan is relatively high and will nullify your savings.

Being debt-free can also help you focus on your savings more.

Prioritizing your debts will help you choose which ones to pay off first when you have many of them.

For instance, high-interest credit card debt may be worth prioritizing over a mortgage with a lower interest rate if it costs you the most interest.

Be Ready for an Emergency 

Many recommend establishing an emergency fund in an accessible cash account once you've paid off your loans to cover unexpected expenses like house repairs or costs related to the family.

While preparing for an emergency can get overwhelming because we do not know what to plan for and save accordingly.

It can cover a wide range of situations. The focus should be that you or your family should not be lost and helpless, given a worst-case scenario.

Preparing for this will help you focus on the issue better, and you will not have to touch your savings.

Ensure that the emergency fund you are setting up is easily accessible so you can withdraw it in any crisis.

This makes life easier for you, your partner, and your kids. It takes the stress off them as well. 

Conclusion

Planning and keeping a long-term perspective might help you be more successful in achieving your targets. It's never too late to start a financial plan, whether you decide to do it yourself or work with an expert.