Having a secure future when it comes to our finances is something we all aim for, and if you have a young family, it becomes even more important. Ensuring your family’s financial future is one of the most significant steps you can take, helping you to provide stability and security for your loved ones. However, it’s not just about saving money where and when you can, as the decisions you make with your finances play a big part too.
Maybe you want to plan for your children’s education, family holidays, or even life’s unexpected events. Whatever it may be, having a plan in place to help inform your decisions can make a difference, helping you to make the best possible choices.
Don’t worry if you haven’t got any structured plans in place so far, as the good news is, it’s never too late to start. If you can take proactive measures now, you can start to protect your family’s financial future day by day. Below, you’ll find some tips to get started including how to set realistic goals and manage your budget effectively.
Why it’s Important To Protect Your Family’s Financial Future
If you want to have long-term stability and peace of mind, spending time on family financial planning can provide you with a clear roadmap. We all know that life is full of uncertainties and it can be difficult to plan for, but doing so can help protect your family from unexpected challenges if they arise.
Think about various scenarios where money could become an issue such as during illness, job loss, or other emergencies that can’t be avoided. Planning for these potential circumstances will provide a safety net that can support your family in times of need. It will also help you stay on track with any savings goals so you can look forward to your future plans as a family.
Starting financial planning at any point in life is beneficial. Even if you didn’t start early, you can still see the benefits. While an early start can give you more time to grow your savings, it’s never too late to make a positive change in your financial habits. Even small, gradual steps can have a significant impact over time.
How To Start Family Financial Planning
It can seem daunting getting started with family financial planning, but this soon becomes more positive as you get into it. When done well, it can be a straightforward and rewarding process that benefits the whole family.
- You’ll need to be prepared to have an honest discussion about your current financial situation, your goals, and any concerns you have openly. This will help to ensure that everyone understands the importance of working together. Like many things in life, communication is a vital part of solving problems and avoiding misunderstandings.
- Start by evaluating your current finances, as this will show you where you are at right now. You’ll need to list all sources of income, any assets, debts, and essential expenses. This will give you a clear picture of where you stand financially.
- Next, involve the entire family in setting financial goals. These could range from short-term ones, like saving for a much-needed budget holiday, to long-term goals, such as buying a home if you currently rent or planning for retirement. These goals need to be realistic and achievable and reflect both your family aspirations and your financial capabilities (more on this below).
- Creating a budget is a crucial part of family financial planning. Track your spending to identify areas where you can cut back and allocate any savings towards your financial goals. Using the best budgeting apps can make this simple to do, but if you prefer a good old spreadsheet, you can do this manually. Budgeting is also important to help you build an emergency savings fund to cover unexpected expenses.
This is not a one-time activity but an ongoing process for your finances. The more effort and accuracy you can put in at the start, the better. It will become easier after going through everything initially, then you can regularly review and adjust your plan if there are changes in your financial situation or goals.
Setting Realistic Family Financial Goals
Having realistic financial goals is important for many reasons. Firstly, they help provide purpose as to why you are budgeting and saving, giving you a clear goal to aim for. They also ensure you can stay motivated, reminding you of why you started in the first place. Not having clear, attainable goals means your plans can easily drift off course and you will lose motivation.
- The key to successful goal setting is to be specific and realistic. You don’t want to set the bar too high as it can lead to disappointment. Let’s say you want to save £1,000 for a holiday – be realistic about how long this will take and avoid putting yourself under too much pressure.
- Identify what your family wants to achieve financially. Maybe you want to save for a dream family holiday abroad, or perhaps you’ve outgrown the family home and need something bigger. You want to have goals for both the short and long-term to aim for. Be sure to involve the entire family in this process so that everyone’s needs and aspirations are considered.
- Once you have a list of goals, go through and prioritise them based on importance and timeframe. Work out the approximate cost associated with each goal and break it down into manageable savings targets. For instance, if you’re planning to buy a larger home in the next five years, work out how much you need to save monthly to reach your down payment goal.
It’s crucial to be realistic about what you can achieve based on your current financial situation. Avoid setting goals that are too ambitious or vague, as this can lead to frustration, and you’ll quickly lose motivation. Instead, focus on creating a balanced plan that aligns with your income, expenses, and savings.
It’s important to regularly review and adjust your goals as your financial situation evolves over time. This will help you to stay on track and be motivated. If you have a boost in income from a new job or have been able to cut down on non-essential expenses, factor this into your goals.
How To Secure Your Family’s Financial Future And To Correctly Budget
Wanting to secure your family’s financial future is a good mindset to have. It puts you on a path towards better budgeting and saving. So how can you protect your family’s financial future with an effective budget?
Calculate Your Income – Start by working out your total household income, including salaries and any other sources of revenue. Understanding your income is the first step to creating a realistic budget.
Track Your Expenses – List all your monthly expenses, categorising them into essential and non-essential expenditure. Your mortgage or rent payments, utilities, insurance, and grocery shop can all be identified as most important whilst variable expenses such as entertainment and dining out will be less so. This will help you see where your money is going and identify areas where you can cut back.
Prioritise Savings – After accounting for your essential expenses, allocate a part of your income towards savings. Aim to build an emergency savings fund that can cover at least three to six months’ worth of living expenses just in case you ever need it.
Create a Budget Plan – Your budget needs to balance your income with your expenses and savings goals. As mentioned, budgeting apps or tools like Money Helper’s budget calculator can help you stay on track and monitor your spending habits. Ensure that your budget is flexible enough to adapt to changes in your financial situation.
Regularly Review – It can be a good idea to have regular family meetings to review your budget and financial goals. This keeps everyone informed and involved and it helps to make your budget become part of your routine. It can help you track your progress and make necessary adjustments.
By following these steps, you can create a nice solid budget that not only meets your family’s needs but also helps you build towards a secure financial future. Remember that everything you do as part of your long-term plans needs to be affordable and not put you into a worse-off position than when you started. That way, you’ll quickly see the benefits of family financial planning and will be able to start enjoying your time together without money worries impacting the mood.
If you’re looking for further information to help with financial planning, please visit Money Helper and Citizens Advice. For more insights, please visit our blog.