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Budgeting and Saving
  A Financial Plan For Your Family

Budgeting and Saving
A Financial Plan For Your Family

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When it comes to budgeting for building your family’s savings, it is helpful to realize that most people who have built wealth didn't do so overnight. They got wealthy by setting goals and striving to reach them.

It takes more than luck to get what you want out of life. You have to know what you want and then commit to a plan to meet your goals. The hazards of not planning include the risk of having a lifestyle of limited choices.

A financial plan can be a positive force that helps strengthen family relationships as people work together to achieve goals. A financial plan helps your family to:

  • live within their income
  • identify financial priorities
  • allocate funds to meet expenses
  • meet financial emergencies and reduce credit use
  • reduce uncertainty and conflict about financial affairs
  • gain a sense of financial independence and control
  • save and invest to reach financial goals

Think of a financial plan as a road map to help you get where you want to go. A financial plan works best if you keep it simple, use realistic income and expense estimates, and periodically review and adjust the plan to reflect changing conditions and goals. A common mistake people make is to prepare a financial plan and then fail to put it into action.

When preparing your financial plan, you’ll want to remember to:

Be realistic.

Establish time frames.

Devise a plan.

Be flexible; goals can change.

Steps in the financial planning process include:

  1. identify financial goals
  2. figure net worth
  3. estimate income and expenses
  4. review personal debt situation
  5. allocate savings to reach goals
  6. balance income and expenses
  7. implement the plan
  8. review and modify the plan as necessary

Key Steps: Develop a Budget and Live by It

A budget allows you to:

  • Understand where your money goes.
  • Ensure you don't spend more than you make.
  • Find uses for your money that will increase your wealth.
  • To develop a budget, you need to:
  • Calculate your monthly income.
  • Track your daily expenses.
  • Determine how much you spend on monthly bills.
  • To help you maintain the discipline to save:Save every month.
  • Have savings automatically deducted from your paycheck or checking account.
  • Base your budget on what's left.

It is important that each household assign tasks and take action to carry out the financial plan. While one person may pay the bills and keep financial records, all adult household members should be involved in major decisions that affect household income and expenses. Open communication among family members about financial affairs can help avoid problems that stem from lack of information or differing opinions about how money is to be used.

Review and Modify the Financial Plan

A financial plan is not a static thing. It is a tool to help you reach your financial goals. Keep reviewing and modifying the plan until you and other household members are comfortable with the way you are using your income.



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