Financial Planning for Families: 6 Tips for Balancing Budgets and Goals
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Cindy Lamothe
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Gary Dudak
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When creating a family budget, there are so many important factors that come into play with shared financial goals. Parents will be looking to grow their retirement funds, while kids on the other hand, will need to plan for college.
According to experts, effective family financial planning requires a disciplined, step-by-step approach. “For most families, the top priorities are funding retirement accounts, saving for children’s education, and building an emergency fund,” said Abid Salahi, co-founder of FinlyWealth.
Below is a step-by-step guide to help families balance budgets and their goals.
Establish Clear Financial Goals
The first step in any family financial plan is to establish clear, shared goals, said Dennis Shirshikov, head of growth at Summer and a finance professor at the City University of New York. These might include saving for children’s education, funding retirement, or purchasing a home.
“Start by having an open discussion with your partner about what you both want to achieve financially,” he said.
Prioritize these goals by time horizon — short-term goals like building an emergency fund should take precedence over long-term goals like retirement savings, although both should be addressed simultaneously.
“For example, a family with young children might prioritize setting up a college savings plan, like a 529 plan, while also contributing to a 401(k) or IRA,” Shirshikov said.
Create a Realistic Budget
Once goals are set, create a budget that reflects your income, fixed expenses (like mortgage or rent, utilities and groceries), and variable expenses (such as dining out, entertainment, and vacations). “The key is to ensure that your budget leaves room for savings contributions toward your goals,” said Shirshikov.
He said the 50/30/20 rule is a good starting point — 50% of your income should go toward needs, 30% toward wants, and 20% toward savings and debt repayment. “Adjust these percentages based on your specific financial goals. For instance, if retirement is a top priority, you might allocate more than 20% to savings.”
Automate Savings
One of the most effective ways to ensure that you’re consistently working toward your financial goals, according to Shirshikov, is to automate your savings. Set up automatic transfers to savings accounts, retirement accounts and college savings plans.
“This not only makes saving easier, but also removes the temptation to spend that money elsewhere,” he said. “For example, if your goal is to save $200,000 for your child’s college education over 18 years, setting up an automatic monthly contribution of around $400 to a 529 plan can help you stay on track without having to think about it each month.”
Manage Debt Wisely
“Debt can be a significant barrier to achieving financial goals, so it’s important to manage it carefully,” said Shirshikov.
Focus on paying off high-interest debt first, such as credit card balances, while making minimum payments on lower-interest debts like student loans or a mortgage. “If possible, consider consolidating debt to secure a lower interest rate and simplify your payments.”
Review and Adjust Regularly
According to experts, a family’s financial situation and goals can change over time, so it’s crucial to review your budget and goals regularly — at least once a year. Then, adjust your savings rates, spending habits and priorities as needed.
“Life events such as the birth of a child, a job change, or market fluctuations can all necessitate adjustments to your financial plan,” Shirshikov explained. For instance, if you receive a raise, you might choose to increase your retirement contributions or accelerate your mortgage payments.
Salahi agreed that once the foundational elements are in place, families can allocate remaining funds toward other aspirations, such as homeownership, travel or lifestyle improvements. “The key is to remain flexible and adjust the plan as circumstances change. Regular check-ins and recalibrations are essential to keep the family on track,” he said.
Involve the Whole Family
“Financial planning shouldn’t be the responsibility of just one person in the family,” Shirshikov said. “Involve your partner and, when appropriate, your children in budgeting and goal-setting.”
He said this fosters a sense of shared responsibility and can help everyone understand the importance of financial discipline. “Teaching children about money management from an early age can also set them up for financial success in the future,” he added.
Overall, experts say that consistency is key. “Balancing competing financial objectives is never easy, but a thoughtful, disciplined approach can help families achieve their most important goals,” Salahi concluded.
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