Family Finances are important and should be given careful thought and consideration. Have you thought about Family Financial Planning, or using a Family Financial Advisor? This post makes a few suggestions to consider during this critical process.
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Family Finances: Setup and Use Family Financial Planning
Table of Contents
- 1 Family Finances: Setup and Use Family Financial Planning
- 1.1 Dealing with “Blockers” in your Family Finances
- 1.2 How does a Financial Plan work, anyway?
- 2 Family Finances: Working with a Family Financial Advisor
- 3 Mêtis in our Family Finances
Proper Financial Planning is a big effort, and it requires time and dedication. My wife and I have wrestled with a lot of “woulda-shoulda-coulda” in the past, and it was the act of intentionally making a plan that helped us dig out of the hole we were in and start making measurable progress.
I’m happy to say we’re making progress, and want to encourage you too! It is never too late to start. Just get going, and you’ll soon be able to look back and admire the progress you’ve made along the way.
As you start to look at this process the “dreams” can often seem out of reach. I would challenge you to dream big! Don’t plan in the constraints of your current situation – anticipate growth, and plan accordingly.
Dealing with “Blockers” in your Family Finances
Let’s all be honest here – is money your biggest “blocker” in Financial Planning? Give yourself a “raise” by cutting expenses (and keeping them low), and consider a side-gig to pad those goals. Attack the high-interest debt, and roll it off incrementally. Seeing the results in your bank account will also boost your resolve!
Already down to the essentials only? Consider an additional job or side-gig. Even if only for a time, the money can add up quickly and you’ll be able to turn the tide of the battle in your favor.
Stay with it! Run your portion of the race each day, stay positive, and stay consistent. Balance that, keep a watch for the inner procrastinator in all of us, and remember that each day you delay is one more day in the trenches. Think of it as chipping away at the goal each day and push yourself at a sustainable pace. From personal experience, we ended up doing more than we thought we could! It all starts with momentum and then building it up as you go.
How does a Financial Plan work, anyway?
I suggest making a list of goals that you would like to accomplish from the perspective of the family unit. The point of this exercise is to take all the best ideas, intentions, and energy and forge them into a plan and reality. You’re about to change your life!
Step 1. Start by writing out the objectives together as a couple. This is effectively a “brain-storming” session where anything and everything goes. Write, write more, and then even more… (think Alexander Hamilton, and “write your way out”) It is ok to take a couple of days in this phase to really think about what you want! You’ll get back what you put in, so make it count here.
Step 2. Is your list too long? Not to worry. The next step is to consolidate and group similar topics, and then re-write your list in an updated form.
Step 3. Ok, now, think timelines. I suggest a grouping like this:
“Short-term/ Immediate” of less than 1 year,
“Medium-term” is 1-3 years,
“Longer-term” is 4+ years,
“Retirement” is just that – what you plan for when you decide to retire!
Step 4. It is coming together now! Take your revised list from Step 2, and slot it according to the mapping in Step 3.
Step 5. Take a hard look in the mirror. You’re doing this! One final phase to go: pruning. I strongly suggest a balanced approach to your goals. Reality checks are important, but be careful not to “rain on the parade” and under-plan. Work as a couple here, and play to strengths. You both know who is the optimist and who is the pessimist (i.e., the realist 🙂 (In our family, my wife and I know this is wholly me). As an exercise, try to focus on the 5 most important objectives for each bucket item (in Step 3) you would like to accomplish as a family.
Suggested Objectives for your Family’s Financial Plan
Let me start by saying your list should be your own, and this is not intended to be a “one size fits all” approach. Make sure you have invested in the plan you and your spouse built, have “buy-in” to achieve the outcome together!
However, if you’re looking for a few suggestions, here are some that I’ve come across during my research. My wife and I also have worked on some, and continue to work on others! I hope this list is a thought-provoking list for you.
SHORT-TERM/ IMMEDIATE GOALS (less than 1 year)
- Get on a Budget and Maintain a Budget
- Establish an Emergency Fund
- Buy Life Insurance
- Setup your Essential Accounts: HSA, 401(k), IRA (Roth, traditional)
Medium-term Goals (1-3 years)
- Create and Establish Living Trust
- Dream BIG(GER), review and revamp goals as needed
- Side-Gig (think Phase 1 and 2 from Rachel’s book)
- Aggressively Hammer away at Debt
Longer-term Goals (4+ years)
- College Savings
- Wedding Savings
- Recreational Investing
- Down Payment for Home, or Investment Property
Retirement Goals (10+ years, varies)
- Fine-tune your 401(k), IRAs, HSAs,
- Continue to review the Living Trust
- Estate Management and an Inheritance
- Insurance (Long-term Care, Life, etc.)
Family Finances: Working with a Family Financial Advisor
Following the steps outlined above will give you a template to work off of, but sometimes that’s just not enough and a professional might be required. Especially for highly nuanced or complicated financial matters. At any rate, know your limit, and don’t be afraid to enlist the professional services of a Family Financial Advisor.
There are always “wolves in sheep’s clothing” wandering around, and a few careful intentional questions and research can save you a lot of pain and money. Warning aside, if that route is what you need, I recommend asking people you trust for referrals or recommendations on services. My wife and I found an excellent attorney and accountant this way, and they form the bulwark of our family financial advisor questions.
I highly recommend doing your homework and asking potential advisors for reviews or referrals to corroborate their stories. Another important piece to consider is how they are going to charge you. Is it a flat rate? Is it by the hour? Upon delivery of a product (e.g. Living Trust)? Additionally, ask them for an explanation of their relative area of expertise. Are you using a general advisor, or is this person qualified to speak to technical financial areas within the realm of “family finances”? Check out more suggested questions, here.
Mêtis in our Family Finances
My wife and I started small, climbed, climbed some more, and are still climbing. I don’t think we’ll ever truly be “done” with family financial planning, and I’m really proud of the progress we’ve made so far.
Modest milestones for us were hitting our emergency fund goal, successfully operating our budget each week, establishing a living trust, setting up life insurance, and paying off $50K of debt. I say this not to brag, but to encourage those who are getting started. You’ll be surprised and encouraged by what you can do in a relatively short time!
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