Develop Financial Goals to Save Money and Help Your Family.

Helping Your Family: Developing Financial Goals That Keep You On Track

Developing Financial Goals

Families need money for education, housing, and food expenses as well as many other costs, yet statistics and polls show that many families are living beyond their means. Unfortunately, low-income family money management often leads to excessive debt, stress, and foreclosure. To prevent these problems, it is imperative that families develop healthy financial habits.
 
 

Money goals

 
Having goals is essential. If you avoid setting financial goals, how will you know what you are working towards? Your specific money goals will depend on your family. If you are a new family, just married, you might wish to save for a home, set aside money for retirement or college, and buy a home. An older family may want to pay off a mortgage and increase retirement income contributions. Your goals will likely change, and that is fine, but it is still important to set firm goals now.
 
Setting goals should be done with pen and paper. Have each family member write down their goals for the next one year, five years, and ten years. Be sure not to consider just "financial goals," since many life goals have an economic component. For example, a college degree may be an education goal, but it will cost money, so it is a financial goal as well. Once everyone has written down their goals, they should prioritize them. Which goals are essential or crucial to each family member?
 
Once all the lists are compiled, it is useful to have a family discussion about each of the top vital and critical goals for each person. Which goals should the family focus on as a whole? For each essential or imperative goal, it is important to develop a plan of action. For example, if one of the purposes is to buy a home, the family may decide to set up a savings account to save for a down payment.
 
Considering all goals, it's not just short-term goals are important. If the family will not need to consider college for another five years, for example, that does not mean that the family should ignore that goal. Perhaps now would be a good time to set aside a small amount of money in an education account, for example, or start applying for scholarships. While the one-year goals will need extra attention and will seem more immediate, it is important to put effort into the long-term goals as well. Also, while the family will discuss vital and essential goals for the family, each family member will want to consider their other goals as well and perhaps work on these as well. For example, one person in the family might wish to buy themselves a new car and may want to develop a plan to get a part-time job to make this goal a reality.
 
 

Budgeting

Once family goals are settled, it is time for budgeting. A budget is a financial plan that tells you exactly where your money should go each month or each pay. You may wish to develop a budget for each month or each pay. When developing a budget, decide how much you need to spend or want to spend on savings for your goals, on food, on housing and other expenses. Make sure to put aside money for incidentals and entertainment and casual spending, too.
 
Many people see budgets as very constricting, but as long as you put aside money for all your expenses, you can still enjoy your favorite activities and treats without feeling deprived – and without losing out on your long-term goals. One good idea before setting your budget is to keep track of every dollar you spend – even little expenses such as gum or coffee. Carry around a small notebook with you so that you can jot down your spending right away. This is a very powerful tool that can show you exactly where your money goes.
 
When deciding on your budget, it is often easier to determine how much you will need for expenses that stay the same – such as mortgage payments. Some budget items – such as heating, for example – may change from month to month or season to season. You will want to account for this in your budget. Try to keep some “extra” money in your budget to cover unexpected expenses, such as car repairs or sudden medical expenses. Alternatively, you can set up an additional “emergency” fund or account where you can place some extra money for expenses such as gifts and sudden emergencies. Any money left over in this account at the end of the quarter or the year should go into savings for your financial goals.
 
 

Making Your Financial Plan Work

When you have the basics of your family financial plan – goals and a budget – you may be interested in some extra advice on making your financial plan work. The following tips have proven very effective for families wanting to reach their financial goals quickly:
 
1) Stay organized and prompt with bills. Pay your bills as soon as you can – even on the day, they arrive, if possible. Note when your bills are due in your planner so you won't forget. Late bills can affect your credit score and can cost you extra in late fees, so pay promptly to avoid these penalties. Consider using online bill payment options, as these save you money and the cost of postage and are often a more convenient way to pay. File all your bills together as well, so that you can easily find them – and pay them.
 
2) Look at your account expenses. Bank accounts and credit accounts cost money in fees. Take a look at your accounts regularly and determine whether there is a way to reduce your costs. Consolidating your credit cards into one or choosing a different bank account with different features could save you money every month. The money could go towards your financial goals.
 
3) Hold a regular review of your expenses. As your family grows and changes, your financial needs will change, too. At least once a year – or more often – carefully review all your budgeted expenses and look for ways to reduce expenses. For example, if you have lost interest in a magazine, do you still need a subscription? If your credit rating has improved as a result of your financial goals and plans, could you qualify for a better interest rate on your home loan or car loan? Is it time to change your insurance? Any savings can be funneled towards your financial goals.
 
4) Take advantage of direct deposit options. Having your employer directly deposit your paycheck into your account often allows you to have the money in your account earlier. Plus, some banks offer special free features for your account if you take advantage of direct deposit. You might want to consider having your savings directly withdrawn from your account as well before you have a chance to miss the amount.
 
5) Shop less often. Plan your grocery shopping trips carefully and shop only once a week or once every other week. Plan for clothing trips as well and shop for clothes seasonally. Staying away from stores and having a plan when buying helps you spend less money.
 
6) Set up a payment plan with your heating or utility company. Many utilities allow you to pay a set amount each month. This helps you avoid very high charges during cold winter months and allows you to spread out your bills evenly over a year, which makes it easier to budget.
 
7) Consider reducing your housing costs. For most families, housing costs are the largest costs on the budget. Looking for more affordable housing helps to reduce overall costs significantly.
 
8) Buy property. A home is an asset and can often be more affordable in the long run than renting. The federal government has programs in place to help families, and first-time homeowners afford a home. As well, foreclosures are often an affordable way for families with even a modest income to buy property.




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