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In recent years, women have become more and more proactive in managing family finances. Family financial planning is often the responsibility of women as well. Statistics by the RBC show that 72% of millennial women are accountable for their household decisions. Similarly, 70-80% of household buying power in the U.S. is determined by women. Despite this, a 2019 report shows that 57% of women are not confident in their financial decisions.
At Atlas Wealth Strategies, we recognize that women are the cornerstone of the success of a family financial plan. Exploring the importance of a family financial plan that involves a step-by-step roadmap and its role in family financial wellness remains a vital topic — even though it can easily fall off from the top of the daily to-do list of most contemporary families. Fortunately, a financial advisor can offer the knowledge and expertise needed to have an effective family financial plan.
Family financial planning refers to a money management strategy that guides your decisions in the different stages of life. The family financial management plan starts with the basic steps such as having a budget, setting family goals, paying down debt, and defining your savings strategy. Additionally, it includes college funding and investing for retirement and long term care.
Besides defining family specific goals, an effective family financial plan must include the necessary steps to work toward achieving these goals. Some financial planners advise you to focus on specific scenarios that you may anticipate in the different life stages. This type of family financial plan accounts for the financial implication of life events such as marrying, having children, sending them to college, and retiring. If you are part of a sandwich generation, a financial plan becomes essential in working towards the financial wellness of your extended family.
A good financial plan must include essential elements such as budgeting, debt payment and goal setting. Therefore, anyone interested in creating a family financial plan must incorporate these key areas. As you get started, here is what you must include in a family financial plan:
Budgeting and Spending
A budget is an essential tool in any family financial plan. Therefore, if you do not have one in place already, make one today; you can use an online budgeting tool if you do not have prior budgeting knowledge.
Ensure that you track your spending to avoid going above the stipulated budget. Remember, tracking your expenses can also help you make the necessary adjustments you need to incorporate into your future budgets and financial goals.
Prioritize Debt Repayment
Include debts such as mortgages, student loans, and credit cards in your family financial plan. Outline the timelines and repayment strategy in the family financial plan. Think of possible ways to accelerate the payoff to improve your family's financial wellness.
Include Financial Goals
A financial goal refers to what you wish to achieve with the your money. Every family financial plan must outline these goals. An example of financial goals includes saving $1 million in retirement or setting aside $10,000 for an emergency. First, however, ensure that you set realistic and specific financial goals.
A family financial plan should include college planning if you choose to have children. The earlier you begin to save, the more time your money will have to grow.
Plan your retirement early, especially if you do not want to be a burden to your children in the future. Think of ways to invest for retirement and include those ideas in your family financial plan.
Insurance planning is among the few things people overlook when creating a family financial plan. Although most people already have a home, vehicle, and health insurance, few consider life insurance or long-term care insurance for their families. Therefore, consider having life insurance or long-term care insurance in your family financial plan to improve the financial stability of your loved ones.
Create a short-term and long-term financial plan that helps you mitigate immediate emergencies and grow your wealth over the long term. A family financial plan should include budgeting, debt payment, and retirement goals.
A family financial plan can help you keep track of your family finances and save for emergencies.
Having a long-term financial plan that considers all the variables affecting your finances can improve your financial confidence.
Having a financial advisor can help you manage your family finances effectively.
Although you can write a family financial plan independently, you can benefit from professional help. A financial advisor can offer you knowledge and expertise to identify and rectify planning gaps in your family financial plan.
Although a family financial plan is something you can do by yourself, having the input of a financial advisor can boost your confidence and help you to invest toward reaching your goals. A financial advisor will help you identify long-term strategies to increase your likelihood of meeting your goals. At Atlas Wealth Strategies, we will help you build a plan that will enable you to work toward having a secure future for both you and your family. Book an appointment to learn more about family financial planning.