Written by Jeremy Biberdorf
Personal finance is hard enough when you are single and are making 100% of the money decisions. But then you get married and have kids and personal finance becomes even tougher.
No longer are you making 100% of the decisions based on your interests or goals. Now you have to consider the interests and goals of yourself, your spouse, your kids and your family as a whole.
It is no wonder then why so many families push relationship finances to the side and focus on other things in life.
In the moment, this seems like it isn’t a big deal. After all, you plan to get back to looking over your money situation this weekend or next week.
But the weekend comes and goes and so does next week. Before you know it, it’s been a couple of years and now you are stressed. Not only do you have to clean up your current financial situation, but you now have less time to save and plan for the future.
The simple solution is to make it a point to review your family finances now. See where you are and start making plans to fix any issues and start saving for your future.
While it might not be exciting to many, once you take the first step, it becomes easier and enjoyable.
In this post, I’ll walk you through the steps to getting started with setting up your family finances for long term success.
How To Set Up Family Finances For Long Term Success
#1. Get Started
As I mentioned above, your first step is to simply take action. Even though this might be tough, it is critical. Otherwise you are never going to do it.
If you find that getting started is a chore, follow this trick I use when I have to do something that I am not looking forward to.
I stop making excuses as to why I can’t do something and make a deal with myself. I tell myself that I will take 10 minutes to work on the task and then I can enjoy a treat.
This trick works 100% of the time. What happens is that I make this deal with myself and start on the task. Then, an hour later, I find I am still doing it.
It turns out the task wasn’t an issue at all. It was just my mind making it out to be worse than it really was. The funny thing is that I’ve used this trick so many times that I know what is going to happen.
I tell myself just 10 minutes but I always get lost in the task. I still fall for it every time.
#2. Assess Where You Are
After you decide to get started, you need to assess where you are. After all, you can’t make any goals or progress if you don’t know where you are starting from.
Gather up all of your financial information and see how much debt you have and what the interest rates are, how much you owe on your house, how much you have in savings and how much money you earn and spend.
You should even look at the money you give to friends or family to help them out of financial jams.
Depending on how organized you are, you might have all of this information or you might not. If you don’t, don’t let it stop you. Gather what you can and keep moving forward. You can fill in the missing information as you go along.
#3. Determine Your Goals
Once you have your current situation mapped out, it is time to start thinking about what your future holds.
What do you want out of life? Where do you see your family in 5 or 10 year’s time? Understand that this part requires the whole family to participate and isn’t something that can be knocked out in 10 minutes.
It will take you some discussion and even a few discussions to come to an agreement on things. When you have your goals mapped out, then you can begin to figure out how to achieve them.
But before we dive into that, understand that any goal you come up with today is not set in stone. This means that over time, your goals can (and most likely will) change.
This is OK. You just have to accept this and be open to making changes as the years pass by.
With that said, let’s get back to your goals. Regardless of what your goals are, you need to make sure that the very first thing you do is to build an emergency fund.
Having a pile of cash in case something happens will be a huge weight off your shoulders and will allow you to achieve your goals.
Without any money set aside, if something were to happen, you would experience a setback in your finances. But having this money will allow you to keep moving forward in spite of the setback.
For example, if you lost your job, unemployment would have a major impact on your finances right now. But if you have money set aside, it won’t have such a drastic impact.
Once you have savings set aside, then you can begin to attack your goals. How you approach this will be unique to your situation. However, I would encourage you to work on the ones that are most important to you, as these will fuel you along the way.
#4. Educate Yourself
The next tip in setting up your family finances for long term success is to educate yourself. I am not suggesting you go back to college or have to learn everything there is to know about personal finances.
But take a few minutes every day to learn more about the subject. There are many magazines, podcasts, and websites that teach you about this topic.
Just read or listen to some and find your favorites. Then make it a point to read or listen more each week.
By improving your financial literacy, you set yourself up for greater success in the future.
There have been many times where I’ve read a story about how one person handles their money that amazes me.
Most of the time the exact situation doesn’t apply to me, but I do learn something and can apply little tips and tricks to my finances to help me save more or spend less money.
At the end of the day, educating yourself on personal finance is only going to help improve your financial situation. Take the time to find some mediums that interest you and start following them.
Final Thoughts
If you want to set your financial finances up for long term success, you need to take action. Stop delaying and start acting.
Without action, nothing is going to change for the better. You won’t suddenly wake up one day and have achieved your goals.
What will happen is you will wake up one day either in the same position as today or worse and wondering why you wasted so much time. Then when you do start to take action, your goals will be close to insurmountable because you have so little time to achieve them.
Don’t make this mistake. Start to take action right now, even if it is only 10 minutes. Getting started is better than not started and will motivate you to reach your goals.
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