Family financial plan: 4 steps to drawing up
Many people cannot clearly answer the question of where their money goes - regardless of the level of income, by the end of the month they evaporate without a trace. The family's financial plan will help control your budget. It will also allow you to see which items of expenditure go to the most, where you can save and optimize costs, how to set aside the required amount and achieve your financial goal.
It may seem that the financial plan of a family cannot be mastered by yourself without the knowledge of a financier or accountant. In fact, this is not the case. A huge number of people without specialized education know how to properly plan their monetary transactions and know where the money goes and how to properly manage it.
Let's take a closer look at how to make an effective plan for your family and what to consider.
- 1 What is a family financial plan
- 2 Why does a family need a budget and why plan it
- 3 What to consider when planning a family budget
- 3. Interests of all family members
- 3. Savings
- 3. Inflation
- 3. Insurance
- 4 How to make a family financial plan: step by step instructions
- 4. Accounting and analysis of all family income and expenses
- 4. Formation of financial goals based on family income
- 4. Drawing up a table of family income and expenses
- 4. Adjusting the plan as appropriate
- 5 How to simplify the recording of family income and expenses?
- 6 Family budget: conclusions
What is a family financial plan
In fact, such a plan is a forecast and planning of all monetary transactions of the family for the long term. It takes into account how much income your family receives, how much each member spends, and on what. You prescribe what you are saving money for and how much is needed for this, as well as think over possible risks, unforeseen expenses and other nuances.
Why does a family need a budget and why plan it
It is believed that this kind of planning allows for good savings, but this is not the only reason. Of course, a financial plan will save you money on rash and useless purchases, but this is not its main goal. Planning your family's finances allows you to afford a lot more for the same money and achieve your financial goals.
With a financial plan, you can predict how long it will take you to save up for a new car, apartment, education in another country, and more. When you know how to manage your finances and know how much you spend, how much you can save, you turn desires into goals with a clear deadline. This approach is much safer than living from paycheck to paycheck with a lack of understanding where the money goes and why it happens so quickly.
Things to consider when planning a family budget
To draw up a competent plan for your financial flows, you need to take into account all possible nuances and circumstances. There are quite a few of them, and sometimes it takes more than one year to collect money for a cherished goal. It is important to understand what you may face and how to protect yourself from unforeseen expenses and loss of funds.
Interests of all family members
When forming a family budget, you need to take into account the interests of all its members. After all, everyone has their own interests, mandatory expenses and desires. A small child often needs new clothes, and you need rest and recovery. The same applies to individual expenses, such as sitting in a cafe, spending on hobbies, travel and the rest. It is necessary to take into account the interests of not only those who bring income to the family. This way you will avoid financial conflicts.
Creating a financial plan costs from 9 to 60 thousand rubles, depending on the complexity. Over the past 3 years, I have read more than 30 books on the topic of personal finance and investments, watched dozens of videos. I'll tell you how I made a personal financial plan, plus I attached a link to my LFP template in the google tab below.
Financial targets for the next 10-20 years need to be defined. The goals may be different: an apartment, a car, teaching children, a house for parents, a summer residence, etc. My main goal is to create capital that will bring passive income in the future, because it can cover all other needs.
Financial Objective should answer questions:
- What exactly is money needed for? The more specific the goal is, the easier it will be to achieve it.
- How much money do you need? In what currency?
- When? What year?
It is necessary to determine the current state of affairs, your "net worth" (assets - liabilities = net worth). Most people don't know their financial situation. If you do this, you will already be different from the majority.
- In the asset column, enter everything that can be sold for money: deposits, real estate, securities, funds, a car, a garage, a summer residence, etc.
- In the liabilities column - all your liabilities. Money that you owe someone. Loans, credit cards, debts to friends, etc.
Then you need to parse the table. See which assets are ineffective. Perhaps you have a summer cottage or garage that you don't use. It makes sense to sell it and transfer money to other instruments.
Also look at liabilities. Perhaps you have a credit card for which you pay the minimum payment and it is high time to close it.
What is it, what is it for (spoiler: if you follow it, there will always be enough money), how to compose and maintain it
You run out of money before you get your next salary, and it seems that it is impossible to live on your income? Do you want to buy something new, big and grandiose? Perhaps you just lack a financial plan. With it, you will know exactly what the money is spent on, you will be able to plan large purchases, you will understand how to save and increase money, and also protect yourself and your family from financial risks.
What is a family finance plan?
This is a long-term forecast of the family's financial flows, with it you plan how much money you will earn over a certain period and how you will spend it.
More than half of the residents of Russia do not keep a written record of income and expenses of the family budget, almost every tenth does not know exactly how much money has been received and will be spent within a month.
It is often believed that a financial plan is needed in order to spend less. In fact, he is needed to get more for the same money. In addition, the financial plan will save you from surprises, for example, renewing the CTP policy or having to pay property tax.
When is a financial plan useful?
In all. For example, you are planning to sell an old car and buy a new one within six months. You need an additional 300,000 rubles. You immediately have questions: save money, borrow money or buy on credit? Will we make it in half a year or do you need more time? The financial plan will help you understand how to distribute income and expenses so that you can save, whether you will be able to accumulate the entire amount for the set period, how your expenses will change if you have to pay monthly on the loan.
Even if your family has no financial difficulties and money is always available, a plan will be useful to keep in mind strategic goals (for example, postponement for old age or education of children) and opportunities to increase income.
What should be considered when drawing up a family plan?
Family planning is a very relevant and important topic. “How to get a husband / wife interested in planning?”, “I write to-do lists, and then we spontaneously decide to go somewhere or do something. All my plans are crumbling. How to be? "," At what age is it worth acquainting children with the basics of planning? " I constantly hear similar questions from friends and acquaintances, from clients at consultations.
Let's figure out how to improve not only your life with the help of planning, but also help your family in this.
Everything related to long-term goals.
Planning family affairs for a month, week, day.
It can also refer to the above two categories. But I decided to highlight it separately, since financial planning has its own specifics. I will write in more detail on this topic in a separate article.
Here are some simple tips:
We have a board at home that looks like this *:
* For convenience, I've added a clickable image. The link will take you directly to the Aliexpress website.
Affiliate link, which means that I get a small commission for recommending a product. This does not make it more expensive for buyers.
On such a board, you can hang a calendar where you can mark common things, holidays, trips, etc., a list of purchases and household tasks that need to be done, invoices for payment, advertising coupons, checklists, etc.
You can keep a separate to-do list for each spouse, so it's easier to distribute them in your schedule.
I advise you to buy a loose-leaf calendar of A-4 format for the whole year, and not just print a calendar for a month. So the affairs for the next months can be written down immediately, so as not to forget about them.
"Planning is boring, but as Warren Buffett says, today someone is resting in the shade of a spreading tree because someone else did the boring job many decades ago, planting a seedling and taking care of it." Warren Buffett
Why write a personal financial plan
Financial planning is the process of defining, planning, achieving and revising your life goals through the proper management of your finances.
Why write a plan on paper, because everyone has their own ready-made and always working plan in their heads?
But in practice, most people prefer to live here and now, without thinking about the future, because "we live once." As a result, we make chaotic purchases and then go into austerity. Moreover, the category of impulsive purchases includes not only clothes and other luxury items, but also apartments and cars.
When I start to tell people about financial planning, all the comments boil down to one thing: trying to plan your life in our country is hopeless. The main request they make to me is somewhat reminiscent of going to traumatology after a broken arm: "Just tell me what to do. Buy dollars or euros ??))"
Financial planning is not about creating a false sense of confidence that someone knows what will happen in thirty or forty years. Life circumstances and plans change. We all remember John Lennon's words that life is what happens to us as we make plans.
Financial planning is an essential life skill that helps you plan for your future and better control your financial goals. Nowadays, it is important not only how much you earn, but also how competently you manage this earnings.
Sounds complicated? But this is not the case! With the steps in this article, you will be able to create a basic financial plan yourself.
Key Stages of Personal Financial Planning
Step Assess your current financial situation
The first step is assessing the current financial situation is very important. Having understood where you are now, you will be able to draw up a plan of movement towards your goal.