Financial Planning Checklist for Your Family

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Every individual needs to take stock of their finances and build a specific financial plan to achieve their goals. This holds true for families as well. When you are just starting a family, say getting married or having your first child, it is vital to assess your financial situation and create a plan to better manage your finances. Financial planning for a family goes beyond saving money - it comprises countless aspects such as budgeting, managing debts, preparing for a rainy day, making suitable investments, and taking steps to secure your family's future.

It is important to take care of your dependents, be it your spouse, your children, or your parents, and to ensure that they are secure financially and are able to deal with any financial emergencies in case something happens to you. Consider consulting with a professional financial advisor who can guide you on creating a financial planning checklist for your family and ensure that you have all your bases covered.

Below is a financial planning checklist you can use to help ensure all your family’s financial needs are addressed and taken care of.

Financial planning checklist for your family

While making a financial checklist for your family, ensure that you include the following items on the list:

1. Create a budget for yourself and your family

One of the most critical steps in effective family financial planning is creating a budget. This helps monitor your cash flows and manage your finances more effectively. You could also create a separate ledger to keep track of the individual expenses of each family member. Consider creating a separate budget for your college-going kids to ensure that they have enough money to meet all their expenses including rent, food, travel, etc. Additionally, if you plan to expand your family, you will need to account for different expenses such as medicare bills, post-delivery care, baby formula, general expenses, and more. Remember, your budget is a reflection of your finances. It could help find gaps, reduce unnecessary expenses and save more. Try and create a budget that can help meet the financial needs of each family member.

2. Build an emergency fund for unexpected expenses

A 2021 survey showed that one-fourth of the respondents had no emergency savings. According to another survey, 4 out of every 10 U.S. adults were unable to pay an unexpected $1,000 expense from their savings. Keeping these worrying statistics in mind, it is in your best interest to maintain an emergency fund to cater to unexpected medical or financial emergencies you might face in the future. A good practice can be to save funds worth at least 3-6 months of your annual income into an emergency fund. The exact amount may vary depending on family size and lifestyle. Additionally, it would be best if you kept your emergency fund liquid. That way, you can access these funds easily and quickly.

3. Manage your debt

As families grow bigger, so do expenses. Many individuals draw loans to ensure their families face no discomfort. This could be to buy a car, a house, or to start a business. It is important to tackle your short-term and long-term debt efficiently. Remember, not all debt is bad. Debt can be categorized as good debt and bad debt. Let us examine the differences between the two.

  • Good debt: Good debt has the potential to enhance your finances or improve your life in the future. Suppose you buy a house taking a home loan. The value of your property may only go up in value, which might prove more beneficial for you in the future. Another example of good debt is taking out a college education loan. You could also start your own business by taking on debt. Although there is always a possibility that your business may fail, if you pick something that you are passionate about coupled with adequate knowledge, the chances of success are comparatively higher. Good debt, in that sense, usually pays itself back.

  • Bad debt: If you are borrowing money to finance your daily expenses or to buy assets whose value depreciates quickly, it may be categorized as bad debt. Bad debts typically have higher charges and can completely derail your financial planning. For example, overusing your credit cards to manage routine expenses, taking out a loan to buy a car, clothes, etc.

If you are drawing too much debt, you could affect your family’s financial future. It is vital to ensure you borrow only as much as you can pay back comfortably.

4. Purchase insurance

Investing in insurance coverage is an integral part of financial planning. Assess different policies thoroughly to find one that meets your unique needs and ensure that it covers your healthcare expenses, accidents, as well as long–term care (if you have ageing parents). Ensure that you make suitable provisions to address any risk or uncertainty related to your family without straining your current finances. In addition, you must also work toward making your family financially independent in case something happens to you. For instance, you could set up a 529 plan for your child, buy a life insurance policy, a home, etc. 

5. Plan your financial goals for your family 

Effective financial planning, especially when concerning family, requires you to understand the goals of your family members and work toward attaining them. After assessing all requirements, you can categorize the goals into short-term, intermediate, and long-term goals.

Short-term goals could be financial goals set for the foreseeable future, such as a family vacation, etc. Intermediate goals represent plans that extend up to 10 years, such as getting a college degree or purchasing term insurance. Long-term goals typically span 20-30 years and may consist of goals such as planning an early retirement. You can plan your finances in accordance with these goals.

6. Consult a financial advisor

Financial planning involves carefully assessing your assets and liabilities, determining your goals, and selecting the methods you intend to use to attain those goals. It is advised that you seek the services of a financial advisor who can help create a checklist and oversee your finances. Financial advisors can review your credit score, investments, taxes, retirement accounts, etc., to understand your financial viability. The advisor can help streamline your family expenses such as determining how much you’ll need to save for future college expenses of your child, selecting the right college saving account, buying life insurance for yourself and your spouse, designing a Social Security claiming strategy and when you can claim your Social Security benefits, choosing a long-term care policy for your elderly parents, and more.


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7. Allocate your assets wisely

You can invest in multiple investment opportunities provided you have identified your requirements and investment horizon. Take care to diversify your investments to avoid putting all your eggs in one basket. Doing so will allow you to not only minimize risk but also enable you to grow your funds at a steady rate.

8. Account for taxes while financial planning

Efficient tax management allows you to reduce your tax liability allowing you to save and invest those funds. It is essential that you take the help of an advisor to manage your taxes and lower your taxability.

When planning taxes, keep the following in mind –

  • Stay on top of the latest tax rules and regulations
  • Understand your taxable income and tax bracket
  • Select tax-efficient investments
  • Make optimal utilization of tax deductions
  • Account for capital gains taxes

9. Create a retirement plan

A proper retirement plan is critical for effective financial planning. Setting a retirement plan not only helps safeguard your golden years but also allows you to save enough funds for your retirement as well as make advance provisions for your children's future expenses and address them more effectively.

Diligent retirement planning involves understanding future expenses and diverting a portion of funds to manage them effectively. You can build your retirement corpus by maxing out contributions to a 401(k), IRAs, and other investment instruments. So, analyze your current and future costs, understand your requirements, and devise a suitable retirement plan accordingly.

To conclude

To be able to better manage your finances, it's important to understand your financial situation and have clear present and future financial goals. Doing so will allow you to effectively understand the needs of your family and create a financial plan suited to their needs. Family financial planning is aimed at taking care of your entire family and therefore needs to be comprehensive. It is advised to encourage your family members to be a part of this process so you may make better decisions collectively. A family financial planning checklist ensures that you cover all your bases and helps enhance your peace of mind providing a greater sense of security.

Use the free advisor match service to match with vetted financial advisors that can guide you effectively on financial planning for your family. Answer a few questions about yourself and get matched with 1-3 financial advisors that can help you with your unique financial needs and goals.

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The blog articles on this website are provided for general educational and informational purposes only, and no content included is intended to be used as financial or legal advice.
A professional financial advisor should be consulted prior to making any investment decisions. Each person's financial situation is unique, and your advisor would be able to provide you with the financial information and advice related to your financial situation.