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How To Start A Financial Plan For Your Family

30 Apr 2021
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Once you get married and start having children, your finances will rapidly grow and become more complicated.  

To help you and your spouse stay on top of things, you’ll need a financial plan specifically for your household. Here’s what you need to do: 

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1. Set financial goals  

The first step in planning your family’s finances is to work out where you want to be money wise and what your priorities are. Your family financial goals will help you and your spouse stay focused and determine the steps you need to take. Some of the more common goals include getting out of debt, being able to live on less than you earn, and saving for your child’s education. 

Your goals can be short or long-term, and will change as you go through life. Make your goals specific and also realistic. Giving each goal a time frame and a ringgit amount is also ideal. Review them periodically to ensure that you’re on track.

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2. Introduce a family budget

A budget is perhaps the most important tool for managing your money. It gives you a clear picture of your household’s cash flow by listing how much income you have coming in compared to what goes out each month.

Once you have a budget worked out, you and your spouse will be able to identify how much of your spending is necessary and unnecessary, and work towards the goals you’ve set earlier. 

It’s important that your planned budget is one that you can comfortably manage and sustain every month. That way you’ll be more likely to stick to it. 

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3. Save for emergencies 

Having an emergency fund should be a priority for every family. This is a savings buffer that helps you stay prepared for unexpected events and prevent or minimise debt. 

Be sure to set aside a separate pool of cash that’s solely to be used for unplanned expenses such as home and auto repairs, family and medical emergencies, and job loss. The general rule of thumb is to save between three to six months’ worth of your essential living costs.

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4. Invest for the long-term

You should also consider growing some of your savings further through investments, as they generally outperform cash savings over the long-term. 

However, do note that the value of your investments will fluctuate from time to time, depending on market performance. It’s ideal to start investing early, as this will give your money enough time to grow and also recover from any losses.

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5. Protect your family’s finances 

Insurance becomes a necessity once you start a family and is even more important if you are your family’s sole breadwinner, as your loved ones are financially dependent on you. 

No one knows what the future holds. Securing your family’s financial future with a life insurance policy is the least you can do to ensure your loved ones can move forward with their lives, in case something happens to you. You don’t want to leave your spouse, children or parents with any extra financial burden in addition to the emotional burden they will face.

Your life policy will serve as a financial cushion by providing your family with income to continue paying daily household expenses, maintain their standard of living, and clear off any outstanding debts such as your funeral costs, credit cards, car loan and mortgage.  

You should also look into a health and critical illness plan for your family to guard against rising healthcare costs. This will ensure you and your loved ones have access to adequate and timely medical care, in case of an accident or illness.

Financial planning is important for everyone of all ages, but it’s essential when you have people counting on you. With the right combination of goals, budgeting, saving, investing and insurance, you’ll be able to secure a comfortable future for your family. 

Along the way, you may need some help on making the right choices. For your insurance needs, our Gibraltar BSN Agents are more than happy to assist you. If you’d like us to get in touch, simply leave your details here.