Planning of family finances

Elaine King

While it is true that saving is extremely important to maintain healthy finances, planning is another key aspect. Planning involves having a clear and realistic knowledge of our income, our expenses, and the needs we must meet; in addition to setting the critical path to achieve our purposes.

Getting started is simple: you need to know how much you earn and how much you spend. Make a list of all your monthly fixed expenses to realize the aspects in which you can save and avoid unnecessary expenses. Saving has more sense through planning: if you clearly know what your goals are and how much you need to achieve them, it will be much easier to set aside fixed amounts monthly.

Planning is very important to have enough income for the future. It is crucial to consider that your financial needs will not be the same within ten or fifteen years. If there are young children in your family, for example, it is important to make sure you have the necessary funds so that they receive a good education when the time comes. On the other hand, you will have to think about your own future and take care of your pension fund, to be sure that your lifestyle will be possible once you retire.

Planning your finances is an activity that does not take much time and all members of a family, according to their age and possibilities, should be involved in the process. Thus, the children will learn that it is important to prevent and save for unexpected situations; and they will also understand that sometimes it’s convenient to abstain from a current purchase to achieve another in the future.

In order to plan, it is very important to set goals and keep track of your process to achieve them. Financial goals should be measurable and clear, and it is best to establish time limits so that they remain valid. Another fundamental aspect of a goal is that it must be achievable and realistic; otherwise, you will lose the motivation you need to achieve it. Help your children to set good financial goals and allow them to enjoy the benefits of reaching them. In this way, they will be implementing financial knowledge that will be essential during their adult life.

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Elaine King - Family and Money Matters™ 2021