Reaching Financial Goals as a Family
Whether you’re looking to purchase a new home, save for retirement or just get out of debt, enlisting every member of your family and household is an important step as you work towards reaching your financial goals. It may not always be easy to talk about money but sharing information, brainstorming and making changes together over time can help families create positive financial habits and even bring people closer together.
To get started on successfully creating and implementing a new family budget, check out these tips below.
1. Get Everyone Involved
Families can often make the mistake of relying on one person to manage the money but the first step to successfully reaching a financial goal is to get everybody involved and aware of the situation.
If you’ve been primarily managing the family finances, it’s important to help everyone understand that the family has new goals that require everyone to make changes. While these conversations are difficult, it’s important for them to take place while every member of the family (including children) is present and to remember to consider all of the comments and questions of each family member.
These conversations are especially important, otherwise absent family members can derail the process.
2. Work Together to Develop an Accurate Diagnosis
Before a family can begin to manage their money differently, they’ll need to take time to fully understand their cash flow. To do this, keep track and make a list of all of your earnings and spending for approximately 2-3 months. Be sure to record every purchase, no matter how small.
Tracking your spending will quickly reveal where problems occur but it’s important not to let family members blame each other. Many small problems may resolve themselves once every member of the family understands the issue, but others will require you to work together.
3. Create a “Game Plan” Everybody Can Get Behind
A game plan can’t be successful if the whole family isn’t on board and ready to follow it. This means everyone’s input, priorities and ideas will need to be included so that each person feels heard and validated. Including the entire family will also help everybody understand that these changes require teamwork and collaboration. For example, the family may agree to start packing lunches instead of eating out, take public transportation more often or begin sharing more often.
Putting this plan together is a great opportunity to get creative. When every member of the family is involved and willing to be flexible, approaches or schedules that seemed unworkable can suddenly become possible.
The game plan should always be put in writing, and should include a contingency plan to specify what happens if the family fails to meet the goals. This is especially reassuring for children, who need to know there’s a “Plan B” so family members can refer to it when questions arise.
4. Don’t Keep Spending Changes a Secret From Extended Family
Sharing your decision to make positive financial changes with friends and extended family is a great way to find additional support from loved ones and even pick up a few tips. For example, they may be more willing to hold a potluck instead of having dinner at a restaurant if they know an evening out isn’t in your budget anymore.
Your announcement may even free other family members to discuss their own issues and concerns. Issues that can be addressed include meals out, unnecessary driving trips, gifts, clothes, and special activities.