Are you considering lifestyle financial planning for your family? If you are, and you’re feeling overwhelmed, it might help to know that creating a solid financial base for your family doesn’t have to be complex, as long as you have a clear plan.
Taking a step back to assess and manage your everyday expenses, savings, investments and so on, becomes much less stressful when you have a roadmap so you can focus on your family’s goals – how you want and need your financial journey to go in order to achieve them.
In this guide, we’ll break down how you can build a financial plan for your family that aligns with your own unique set of collective objectives, whether that includes growing your family, home-buying or saving for university. Whatever your dreams for your family’s future might be, having a plan will give you invaluable peace of mind.
Let’s start by taking a look in more detail at why family financial planning is so crucial.
The importance of shared money goals
Shared money goals typically lead to a more comfortable, happier life. Financial planning for couples is just as important as shared family goals. In fact, the earlier you start to make plans, the greater your opportunity to grow your wealth.
When you share your money goals as a family, you foster a healthier attitude to finance. Leading by example, you are naturally teaching your children to be aware of their spending, how to budget and save for their future life goals.
A family affair, it encourages you all to take ownership of your finances. And it’s incredibly motivating for the entire family to work together towards common and individual goals – a team effort which can pay dividends.
Security
Increasingly, we want to provide security for our families – and not simply accumulate our own personal wealth – both for life and once we have passed. Your planned financial journey will need to take this into account. Knowing your family are financially secure in the here and now and even beyond your lifetime brings the ultimate inner peace.
A plan should include your personalised family budget, debt repayments, emergency savings, life insurance and retirement planning.
By having all this in place, it gives your family day to day stability, so you can keep on course, even when times get difficult. You are free to concentrate on your long-term objectives.
Lessening financial stress
Being able to pay your debts and bills and meet your family’s financial needs, both now and in the future, alleviates the worries that so often go with little to no financial planning. And this has a positive knock-on effect in many aspects of life.
Your family’s lifestyle plan
Step 1: Assess your current net worth and spending habits
Understanding your current financial situation is the first step you need to take when creating your plan. Knowing your incomings, outgoings and spending patterns is vital. Remember to track even the smallest of regular outgoings, for example, a daily coffee or sweet treat.
Knowing where your money goes means you can make decisions on where you’re prepared to cut back to get the most from your finances.
Step 2: Establish your short-term goals
Using the information you’ve obtained from looking at your current situation, organise your short-term family objectives. This could look like paying off a debt that’s costing you in interest or saving for a special event, party or holiday.
Step 3: Establish your long-term goals
Your long-term goals might include buying your first home or upsizing, paying for your child’s education or saving for retirement, for example. It’s important to know how much you will need to achieve each target and by when. The key is to be specific.
Doing this will help you identify the most suitable strategies and tools to help you reach your objectives.
Step 4: Set your budget
Armed with all this information, you are able to commit to a budget that’s workable for you and your family. It needs to be realistic and trackable.
Give yourself limits on spending that’s non-essential. This is a good foundation for prudent living and establishing better habits.
Step 5: Start or grow an emergency fund
Having around six months’ worth of emergency funds should life throw you a curveball will help keep money worries at bay. Knowing that if your roof leaks or you’re made redundant you can manage comfortably for a while will be extremely reassuring.
To get into good habits, make payments automatically so you aren’t tempted to spend money that you planned to allocate to your fund.
Step 6: Automate savings to make regular contributions
Make it as easy as possible to stick to your plan by automating transfer to your savings account monthly if you can. This will build both consistency in your saving habits and your savings fund.
Establish what you can afford by identifying a percentage of your monthly income.
Step 7: Monitor and adapt your plan accordingly
Your plan will need to be flexible to allow for life changes and unexpected events. Ongoing tracking of every part of your plan is therefore vital. You can then make any adjustments you need to.
Step 8: Stay focused on protecting your assets and planning for growth
Both factors both need ongoing attention for security now and growth and greater security in the future.
Step 9: Include and adopt healthy debt repayment plans
It makes good financial sense to repay more than simply the minimum repayment on your debts. You will not only decrease the amount of interest you pay but you’ll also clear your balance sooner. Start with debts that are costing you more in interest first.
Automate your payments to keep things on track.
Step 10: Your child’s education
If you have children, it is well worth factoring in any potential education costs in advance. Whether that’s for private education, college or university courses, saving now will mean you can help them without it affecting your family plan when the time comes.
Step 11: Plan well for later life
The earlier you start to make plans for when you retire, the better. If you can, set aside around 15% of your income and as with all your important regular payments, stick to your plan by automating your payments.
Consider your retirement goals and your preferred type of lifestyle, as well as potential health and care costs. And consider setting up a Power of Attorney (PoA). This will enable the person or people you trust the most to make both welfare and financial decisions on your behalf should you lose physical or mental capacity.
Think about those you care about and protect them with the insurance policy or policies that will be most suitable.
Make a Will as soon as you can, particularly if you have dependents or your family circumstances change. When it comes to securing your family’s future, there is no act as important. This will ensure your assets will be distributed in line with your wishes. It will also prevent legal disputes.
You will also need to consider estate planning; about the legacy you wish to leave. No one likes to think about it but once done, you’ll have a plan in place to protect your loved ones, and you can go back to focusing on your short and long-term goals again.
Step 12: Consider seeking financial advice
Even if you feel you have it all under control, seeking advice from a specialist may be extremely beneficial, so shouldn’t be instantaneously discounted. You may know the savings and investment markets and you may already have a very good idea of how your family lifestyle plan should look, however an experienced and qualified adviser may have access to investments and products you may not know about.
They’ll be used to projecting for financial plans, taking into account inflation and rising costs. And they will be practiced in making plans flexible to align with changing life events.
An experienced financial adviser will have encountered most variables so can help guide you based on this knowledge and all-round proficiencies.
If some members of your family hold greater financial resources than others, there are numerous ways to transfer wealth efficiently and in a tax-sensitive manner, supporting the financial stability and wellbeing of the entire family – particularly when multiple generations are involved in retirement. You might wish to contribute towards the cost of education, assist with social care expenses for elderly relatives, or help family members to move into larger or smaller homes as their circumstances require.
A professional adviser can ensure your money is positioned where it is needed most, at the right time, and for the benefit of the right people.
At Ascent Financial Planning, we believe in offering honest, comprehensive advice that’s built around your goals and what matters most to you.
Supporting you at every life stage, we can create a flexible financial plan that grows and adapts with your family’s needs.
