What Does Great Family Financial Planning Look Like?  

Financial goals can sometimes take a backseat as families grow. Instead, supporting the day-to-day expenses of raising kids and maintaining a household becomes the ultimate priority. But taking time to step back and create a family financial plan can make a big difference in the quality of life for parents and kids alike.  

What is Family Financial Planning?  

As your family grows, so does the complexity of your financial situation. With every new child, financial goals shift and change to accommodate them. Luckily, great family financial planning can be simple and easy to understand if you focus on these six components:  

Financial Goals  

The foundation of any financial plan is your long-term goals. Goals like being able to retire at 55, fully funding the education of all the kids, or taking a two-week holiday at the end of every year are important, and they can determine everything else about your finances.  

Sit down with your spouse and kids, if they’re old enough, to decide on several meaningful family financial goals. Your list should be a combination of short and long-term goals that encompass your family’s values. Once complete, you’ll use these as guideposts for how you spend, save, pay off debt, invest, and manage all other aspects of your financial life.  

Debt Management  

If your family is carrying debt, whether it be from student loans, car loans, a mortgage, etc., you’ll need a solid plan in place to pay it off. A great debt management plan should outline how much you can afford to put toward debt repayment each month and the strategy you’ll use to get there.  

For example, the debt snowball, which starts by paying your smallest debt first, and debt avalanche, which begins by tackling the highest-interest debt first, are two popular ways to approach debt repayment. Choosing a strategy and sticking to it can put your family in a position to pay off debt quicker and save money on interest in the process.  

Insurance Planning  

Once kids enter the picture, it’s wise for both spouses to have a life insurance policy. Life insurance can help to replace income if something happens to either spouse. But more importantly, it provides peace of mind for the policyholder that loved ones will be cared for in their absence.  

There are several different types of life insurance to consider, including term life insurance and whole life insurance. While term life insurance policies can cover a set period of years, a whole life insurance policy is for life. A whole life insurance policy can also accrue cash value, which can be a valuable tool for legacy planning.  

Retirement Planning  

When it comes to retirement planning, parents may want to consider funding their retirement ahead of any savings goals for children. That’s because kids have a lifetime to pay down debts, but parents only have a finite amount of working years to save.  

To start thinking about retirement, decide how much you think you’ll want to spend on a monthly or yearly basis. Then you can break down what kind of nest egg you’ll need to have to be able to comfortably retire and set saving and investing goals to make sure you’ll get there.  

Education Planning  

The cost of an excellent education continues to increase. So, it’s more important than ever to begin saving for a child’s future education expenses while they’re still young. But this conversation is more than just what parents are putting away for kids.  

It’s important to set expectations with children about financial aid, scholarships, or student loans. Having these conversations with teens may encourage them to take a larger part in obtaining the highest-quality education at the best price.  

Estate Planning  

The bookend of a great family financial plan is estate planning. Of course, it’s never enjoyable to talk about what life will look like after a parent passes away. But it’s an essential part of making sure loved ones are cared for financially.  

PB Ritz, leading Sydney Wills and Estates Lawyers say that each parent should have a Will in place that outlines how their assets will be distributed. It’s also wise for parents to include information about who will become children’s legal guardians in the event of a disaster. 

The Bottom Line  

A great family financial plan takes a holistic look at the family’s financial goals and includes everyone. If you want to create a family financial plan but aren’t sure where to start, reaching out to a certified financial professional is a wise first move. They can help you cover every aspect of family financial management and help to check your blind spots too.  

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