Tips for Making a Family Financial Plan

In today’s world, purchases involve plastic more than paper. It’s more challenging for kids to understand the concept of money. Having discussions about money can help your kids understand the importance of financial planning. As each year comes to a close, consider making a family plan for how you will manage your money for the year ahead. Here are some tips from our family.

Discuss how to earn money

First, we discuss ways that we can earn money. Our kids are aware of how my husband and I make money through our jobs. We ask them to think about ways that they can earn. When they were younger, we discussed how completing tasks “earned” them money to buy little things like a lollypop or a small toy.  For next year, my son has decided he’ll help shovel snow this winter to earn some extra cash. My daughter is taking a babysitting course so she can earn too.

Create a spending plan

Next, we discuss how our money contributes to the things we need first and the things we want second. We create two lists to review what these things are for the new year. My son wants a new computer and my daughter wants a trampoline. We review our needs like paying for food, housing and clothing. Try this with your kids. Look at the list and discuss what they would need to save to earn the things they want.

Create a savings plan

Each year, we discuss the things we want to save for. For example, the kids want to go to Disney World next year, we created a financial goal for each of them to contribute. They track their contributions in a spreadsheet on my husband’s computer. For younger kids, you can create savings contribution jars like the ones below. You might pay them in coins for doing jobs like cleaning their room or raking some leaves.

Discuss longer term goals

Toward the end of elementary school, we began discussions about saving for college. Now that they are 12 and 14, we talk about saving for things like buying a car, home and even retirement planning.

We’ve told our kids how using a 529 plan is part of our overall college savings plan. A great option is the MEFA U.Fund College Investing Plan. It’s the Massachusetts 529 college savings plan manage by Fidelity. The MEFA website provides great information about saving for college.

Create a giving plan

My family also creates a giving plan each year. We like to give to our local animal shelter each month and adopt a family for the holidays. We start saving at the beginning of each year so that we have plenty to contribute later in the year. Ask your kids about how they might like to help other people in need. Little kids sometimes have the best ideas.

What tips do you have for a family financial plan?

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