X

The 3 Basic Principles Of Sound Family Financial Planning

|| Guest Blog : Jim McKinley ||

Financial planning is a basic part of being an adult, but things really do go up a gear when you start thinking about having a family. Raising a child is expensive – around $233,000 on average from babyhood to 18 years old – and bigger long-term costs like college can make the future look dizzying. 

The good news is that planning does make a difference and that it doesn’t have to be too complicated. In this article, we break down the basics of family financial planning into three main categories: budgeting, saving, and preparing for the worst.

Budgeting

Budgeting is the key principle behind your day-to-day financial planning. A solid budget will allow you to stay on top of your family’s finances, making sure you don’t overspend and allowing you to build savings. 
So the first thing you need to do is build a budget. Mint has a great step-by-step guide to building a family budget: Start by deciding your medium (paper or electronic), tally up your outgoing and ingoing money, and then start to subdivide it into specific categories. 
Your discretionary spending is where you will be able to make the biggest changes. Some areas to focus on include:

  • Food – Learn to plan your meals ahead of time and focus on making big-batch meals you can freeze. There are several meal planning apps that can help you with this. 
  • Clothing – Save money on children’s clothes by shopping secondhand or at thrift stores, organizing clothes swaps, and looking out for end-of-season sales. 
  • Entertainment – Use free resources like your public library and museums. For TV, switch to a single streaming platform for the whole family. Alternatively, if you haven’t really watched live TV in ages, you probably only need a Netflix, Hulu, or Amazon Prime subscription.

Saving

Savings are the more long-term aspect of your financial planning, and they are absolutely crucial for financial security. At the very least, you should be saving for the following:

  • Retirement – Aside from the added costs of having a family, this should remain your priority. You may have to live for several decades on this money, so you can’t afford to stop saving for retirement.
  • Emergency Fund – As a family, you should have three to six months’ worth of expenses saved up in case of an emergency. This can also be used to cover unexpected costs like home repairs or pet medical bills.
  • College – According to CNBC, a full college tuition at a private school is expected to cost around $500,000 by the time a child born now turns 18 (over $200,000 for a public college). The sooner you start saving for tuition, the more money you will save thanks to the magic of compound interest. 

Preparing For The Worst

As a parent, you will need to have everything in place to keep your family safe and financially secure in case anything happens to you or your spouse. 

If you don’t have a will, you should get one. You will have to decide whether you want to hire a lawyer (which can cost between $200 and $1000) or use an online product or template. The latter works great if you have a simple estate, but people with more complex cases should hire a lawyer. Make sure you add a guardianship clause to determine who will take care of the kids if something happens to both you and your spouse.

Life insurance is also crucial for keeping the family financially secure after you pass away. It can help pay off the mortgage and cover medical expenses, school loans, and funeral costs. To make sure you don’t overpay, use an online calculator to establish what you can expect to pay before you start shopping around.

If you are overwhelmed by the amount of money you will need to spend and save to comfortably raise a family, don’t panic. Small changes in your lifestyle will add up, and it’s okay to let your financial cushion build up slowly. Stay on top of your budget, put money away in savings every month, and have contingency plans in place. Soon enough, you’ll be prepared for whatever life throws at you.


As a former banker, Jim McKinley uses his background and skills to provide advice and valuable resources to anyone who needs help with their financial literacy. In his spare time, Jim spends time with his family and his dogs and he maintains his website Money with Jim.

Photo by Agung Pandit Wiguna from Pexels

Looking for an Answer?

Resource Center

Featured on

  • "On behalf of all of us at Organon, I want to thank you for participating in the Experts in Reproductive Medicine Meeting. Your financial planning sessions were so informative. We received wonderful feedback and a great interest in learning more about business finance as well. I know that there were quite a few physicians you were able to spend time with throughout the weekend. Many of them conveyed their appreciation for all of the help and advice you extended them. We are so appreciative and cannot thank you enough for such a great job!"

    Cathy R. Termini

    R.PH Organon Inc.

  • "Where do I begin? You were excellent at the OSC Power Meeting XXIV recently held in St. Pete Beach, Florida. The speaker evaluations proved that you were a huge hit with our members. QSC members are much better off, both personally and professionally, for having attended your program. I might add that we have never had as many requests for the recording of a presentation as we have with yours. Don’t ever hesitate to have any prospective clients contact me as a reference. Thank you again for such a positive experience."

    Charles E. Wallace, III

    Executive Director/Quality Service Contractors

  • "There is always an exception to every rule and your recent seminar to our JWT employees provided that. Generally, I believe you get what you pay for and since we didn’t pay you anything for your recent talk one might not expect the reaction we got. Instead, I have been besieged with compliments about arranging for you to speak. Our employees felt more informed and financially empowered as a result of your discussion with them. I enjoyed meeting you and will be pleased to know the face behind the column that I read in every issue of Money Magazine."

    Jeff White

    Executive VP/General Manager/J. Walter Thompson

  • "On behalf of the Water Systems Council I would like to thank you for speaking at our Spring Meeting in Washington, DC on March 3rd. Your presentation was very well received by our members. The information in your presentation and additional reference materials you provided were both fascinating and timely. We hope you enjoyed meeting our members. Thank you again for taking the time to speak at our meeting."

    Kathleen M. Stanley

    Executive Director/Water Systems Council

  • "The crowd was small, but the quality of your presentation was superb, addressing precisely the areas which I had hoped you would cover. It obviously had a high-interest impact upon the participants. And – it is the kind of expert contribution which makes for a successful meeting. Thank you immensely! And – thank you again for joining us at the Club!"

    Lewis O. Kerwood

    National Society for Real Estate Finance

  • "On behalf of the Take Charge America Institute, the University of Arizona Students in Free Enterprise and their Credit Wise Cats team, I would like to extend my appreciation for your wonderful keynote address last week. Our three-day symposium, “Money Talks, Think you Know? Think Again!” was a great success, largely due to the relevance of your opening statements."

    Marica Klipsch

    Education Coordinator/University of Arizona

  • "Your presentation certainly contributed to the overall success of the event. I sat in on your presentation, “Earning Fast Profits in Hard Times”, and found your presentation to be insightful, educational and thought-provoking and the topic was certainly timely. My opinion of your presentation was confirmed by feedback I received from event attendees. It was a pleasure to have you at our event and it is without reservation that I would recommend your presentation skills to anyone interested in having you speak. I look forward to working with you again."

    Michael P. Scott

    VP/Director of Business Development Pensco Trust Company

  • "... Here are some statistics we received from the attendees: 93.38% agreed that you presented in a clear, organized, engaging manner. 94.84% agreed that the information you presented was valuable to them as business owners. 83.01% agreed that they would travel to attend a 1 or 2 day course presented by you. 83.77% agreed that they would like to see your topics brought to their local study club. 87.25% agreed that they would like to see your topics offered at a future Symposia. Thanks again for all of your awesome contributions!"

    Shaida Ghomi

    Seattle Study Club For Dentists

  • "Thank you so much for coming out last week to Las Vegas and speaking to our participants. I heard so many great things from people that attended your course about how useful the information was."

    Sheryl Dare

    Meeting Planner for Genentech Corporation

  • "... I appreciate your efforts to present meaningful content to make a successful event. Your professionalism, delivery and ability to engage with the attendees were exceptional. I know there were many attendees in the room including me who left with new ideas and insights..."

    Wendy Mathea

    Supplier Diversity Officer/Amgen

Have a question?