Family financial planning is often overlooked by families, which is ironic since almost all families I have spoken to have plans of travelling to beautiful cities and serene beaches all over the world. Most of these families are totally ignorant of the importance of well-planned financial planning for the family, let alone knowing about what financial planning really means. They imagine a rough idea of a finance record book being scribbled with numbers and words– a mundane routine that at best, works for a few weeks.
True family financial planning, however, is not about extremely frugal and keeping records of the groceries that were done two days prior. It is about thinking ahead and mapping out the future of the family. It is not a routine but a dream-maker, aiding these families in their endeavours, whatever that may be. Financial planning frees you and your family from the financial burdens that may haunt you and allows you to better focus on time spent together. Here are some ways that family financial planning will be beneficial.
Although it was already mentioned above, I really cannot stress the significance of this benefit. Many adults struggle to make ends meet and worry over the weekend about work and bills they have to pay. How then can they fully focus on the present and spend quality time with their children? This severely affects the family bonds, especially the vulnerable bonds between parent and child.
With proper family financial planning, debts and bills are able to be paid off with no sweat, while the budget set for the weekend fun is sufficient to bring about fun and laughter for the family. Worry no more about making ends meet and the difficulty of spending for entertainment.
Often times the expenditure of the family is unnecessary and spent on things that reap neither emotional nor financial benefits. While it is important to live in the moment, indulging and succumbing to impulse buying is extremely dangerous in the long run. Usually this leads to the income-earners of the family getting stuck in this phase of no progression. Burning out from here on is also common, as they begin to lose the motivation to work due to the seemingly unrewarding work life.
Alternatively, if the money is carefully planned out, it can be invested to reap long-term benefits. These investments may instead accumulate a larger income per month, allowing them to increase in their gross income as a family.
Families want to upgrade their homes either through renovation or moving to a larger one. These plans are always perceived to be ‘in a few years’ time’. Sure enough, when the time comes for them to move or renovate, they have to pool all the money that they have at the present moment and hope to secure a high enough bank loan and low price. Despite so, they begin to roll back into debt. A larger portion of their income begins to dwindle as more is put into settling these debts while entertainment has begun to take a backseat.
This is totally avoidable with proper family financial planning. By setting a realistic goal and a proper savings system, when the time calls, these families will be more than ready to move without batting an eyelid and can safely commit without any fears of haunting debts.
The Asian Financial Crisis of 1997 has had quite a lasting impact on family families here in Southeast Asia, as most struggle to climb back up from the unexpected financial hit. In retrospect, certainly more could have been done to prevent such events from hurting the finances of the family.
Family financial planning comes into play here as they add a cushion for any possible damage that is inevitably going to come at any point of time. The family will be able to spring back from the financial hit and continue to climb up the ranks, having an advantage over those that had no plans for the rainy day.
With that said, benefits are merely just benefits. Something more important that has to be addressed is how this can be executed. Here are 5 ways of carrying out family financial planning.
These finances include taxes, debts, bills and running payments that have to be settled constantly. Some of these we pay without much thought, but on careful identification can actually take a large chunk out of our income.
This means total control over the flow of the income in the family and increased financial freedom. Leakages are able to be repaired and all expenditure is carefully monitored and planned.
It can be hard to save mindlessly with no goal – saving can be made much easier with adequate planning and goal in mind. Keep in mind we’re not talking a dollar here and a dollar there, but thousands of dollars in savings. As a family, this can be easily achieved with proper guidance and teamwork.
To most, investments are seen as dangerous and risky affairs. It is important that the family come together to discuss about the risks involved and plan out for investment. With proper care and financial planning, investments act as a passive income for the entire family – more money can be spent on saving up for future expenditure or for short-term entertainment.
With proper insurance plans that are relevant and cost little, it can act as a cushion for risks which is an unavoidable part of any business or career. No one would want to risk their family’s future and hard work due to a small slip up in a business or retrenchment in a bad economic situation. Investing in insurance is a sure way to ensure the security of your family.
The first step to stable family finance is to plan; it is more important to spend more time to sharpen the axe before chopping the trees. Start out with the advice that we are able to give and begin a plan for the long term. In-depth plans for the family will ensure a long-lasting and stable finance for everyone.r