6 Financial Planning Tips for Families ...

1. Be Honest

Money is a sensitive topic for all families. That’s why you should be honest with each other. Before you settle down with a person, make sure you trust them. Tell the truth about how much you earn and let them do the same. Honesty about one’s earnings creates room for reasonable expectations.

Be honest about your loan obligations. Tell your spouse if you’re still paying your college loans so that they don’t get mad at you for not providing as much as you should.

2. Have Similar Financial Goals

The only way you can grow as a family is if you have similar financial goals. You either work as a team or argue as individuals. Sit down and have a serious talk with your partner. Tell them your expectations and listen to theirs. Then, consolidate your expectations into one mutual financial goal.

Break down the main financial objective into numerous tiny goals. When you share similar goals, you’ll be motivated to work together and support each other to achieve those objectives.

3. Consult Each Other before Spending Big

Nowadays, it’s normal for both spouses to be employed and earn their money. As much as you may want to spend that money without limits, you have to remember that you’re a family, and you function as a single unit. Therefore, make sure you consult each other before making big financial decisions.

It wouldn’t feel good if your partner bought a house without telling you. Couples should respect and treat each other as equals. If your partner doesn’t consult you before making a big purchase, you feel cheated and disrespected.

4. Budget

If you have people who depend on you, you should watch what you spend on a monthly or weekly basis. A budget is a list of items you're going to purchase during a certain period. A budget helps you know what you need.

To create a budget, you should calculate the total monthly earnings of both spouses. Then, create a list of all recurrent purchases. Analyze that list to see which items are necessary and which ones aren’t. Don’t forget to account for seasonal costs.

When creating a budget for the family, there should always be money left over. What’s left after subtracting your expenses should be saved for emergencies. An example of an emergency is losing your job unexpectedly. In case that happens, you need money to sustain your family as you look for a new job.

5. Life Insurance

A life insurance policy protects your family in case of an early demise. When there are two of you, family expenses are manageable. However, when one spouse unexpectedly passes on, the financial burden gets heavier. A life insurance policy can be used to clear any financial obligations you had with your spouse. For example, the insurer can clear the mortgage on your behalf.

You may ask, “How much life insurance do I need?” Unfortunately, there’s no straightforward answer. You can pay as much as you like if you can afford the premiums. Some factors that will determine the amount you pay as premiums are age, occupation, health, and hobbies.

6. Plan Long-Term

A budget and saving for emergencies isn’t going to help you achieve your dreams as a family. If you want to be able to afford yearly vacations to the Bahamas, you should invest your money wisely. What is your spouse good at? What are you good at? When you combine your skills, you can invest in something that triples your income in the future. You should also ask for advice from a family financial planner.

Life doesn’t always go as planned. You may overspend because you found a deal that was too good to resist. That’s why you should review your family’s financial goals every three of four months to make sure you’re still on track. If you run into some issues, adjust the plan accordingly, and keep moving forward.