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4 Tips For Creating A Solid Family Financial Plan

Having a family means taking on additional responsibilities. Many of these responsibilities involve making sure your family is provided for in a variety of financial ways. This includes all time-frames, in the present, as well as far into the future. However, this is easier said than done. According to CNBC, 80 percent of Americans are in debt… with that in mind, below are four tips for building a solid family financial plan.

Plan for the Short-Term and the Long-Term

save-for-the-futureMany people live paycheck-to-paycheck and month-to-month. This means that any small problem like needing new tires becomes an emergency. If you have a contingency fund you schedule a time and get new tires. But without the money, you keep hoping a tire doesn’t blow. Then one day it happens and your life is thrown into turmoil. And suddenly it’s an “emergency”. I beg to differ, that isn’t an emergency… that is simply poor planning.

If you don’t plan for new tires, what about longer term? Are you planning for much bigger expenses like your kid’s college? According to Forbes, a four-year pubic-college education on average costs $28,000 a year. You need to begin planning for these expenses early or you may run into serious problems trying to find the funds when you need them. You can save a great deal by sending your kids to community college for the first two years and then on to university for the last two. And guess what? Their diploma will look the same as the next guy who paid full price for all four years.

Even though this will save you a bundle on tuition and room and board (since your student can live at home for the first two years), you still have to pay something. Tuition alone at a community college averages about $3,440 per year. Which is much better than university costs but still much more than a set of tires. One way of planning for college is with a “529 Savings Plan”. These plans vary by state but allow you to choose a plan and lock in costs at current rates and pay for it over time. So rather than paying for four years of college in four years you can spread it over 16 or even 18 years if you start when you baby is well, a baby. And as an added bonus you get a tax break for doing it. You can choose plans to save for either Community College or University (or a combination of both)  Doing this properly allows your child to graduate debt free and get a good start in life rather than starting saddled with debt.

Obtain a Health Savings Account

Planning your family’s finances also requires planning for your medical needs. While health insurance is a good first step, not all health insurance plans pay for every out of pocket cost you could encounter. One good way to save for out of pocket costs is to obtain a tax-advantaged health savings account. That way, you avoid paying taxes on the funds placed into the account.

Buy a House

If you want to plan for your family long term, you should be thinking about buying a home. In recent years, renting has become more popular but that doesn’t mean it is a good idea. Renting is not a good long term investment. Just like leasing a car, you will continue paying higher rents indefinitely without ever actually owning anything in exchange. Instead, you should be thinking about purchasing your own home so you do build equity in the house and actually lock in a fixed monthly payment. With a fixed term mortgage, your monthly house payment is locked in, so even as other prices inflate your house payment stays the same. Over the 30 year life of a mortgage that can make a big difference.   Discuss your options with different mortgage lenders such as those at Assurance Financial Group for obtaining a mortgage that can work with your family’s financial situation.

Save for Retirement

Saving for retirement these days is more important than ever. This is especially the case since the future of Social Security is far from certain. Make sure you obtain a quality retirement plan for you and your spouse to insure that you do have the income necessary to enjoy your later years. Investigate different choices such as a 401k plan, IRA, Roth IRA and more. Plus if you buy early, by the time you retire your home should be paid for, so if you down-size you can get a lump of cash out of your home to help with your retirement.

Handling your family’s finances is certainly a responsibility you should take very seriously. Consider all the expenses your family is likely to incur both in the long term and the short term and plan for all eventualities such as college, owning a home and medical expenses and then consider tax savings when crafting your plan.

About Tim McMahon

Work by editor and author, Tim McMahon, has been featured in Bloomberg, CBS News, Wall Street Journal, Christian Science Monitor, Forbes, Washington Post, Drudge Report, The Atlantic, Business Insider, American Thinker, Lew Rockwell, Huffington Post, Rolling Stone, Oakland Press, Free Republic, Education World, Realty Trac, Reason, Coin News, and Council for Economic Education. Connect with Tim on Google+


  1. Jesse Jamison says:

    I agree with you that it is important to have long and short-term financial plans. It is just sometimes hard to get to this point. My way of making it to this point is to set goals for how much money I want to save each month. When I was first out of college the goal was to save enough to have $1000 dollars in my savings account. It took about a year to do it, but things got much easier once I made it to that point. I had proven to myself that I could budget and save money.

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