Moneycontrol
Last Updated : Nov 30, 2018 08:20 AM IST | Source: Moneycontrol.com

Involve entire family in financial planning: 6 simple steps for wealth creation

Senior members of the family need to educate the young on savings and make it fun by awarding the points if specific saving targets are met

Moneycontrol Contributor @moneycontrolcom

Rahul Jain

Money is not a topic most households tend to discuss, yet it is a topic which draws down most of our family goals. Getting your family finances in order can be a daunting prospect, but by breaking down the process, setting yourself certain goals and being disciplined, it doesn’t have to be. By making a financial plan you can get you and your family on the right path, no matter what your goal is. Below are six easy steps to get around it.

Everyone sticks to the budget

Just about every family member has a budget, the homemaker has a household budget and kids have their pocket money. The easiest way to save is to ensure every member stays on budget. In other words, overshooting the budget is a strict no-no. In fact, members must be encouraged to save a little from the budget every month and set it aside in a mutual fund or saving account. When the spirit of savings is inculcated earlier on, particularly in the young, it gives a big push to the family’s finances.

Use technology

Today younger family members are online and it is really important to leverage technology better to make the younger ones understand when it comes to savings. There are many apps which can help them to appreciate to save that extra money on online deals on groceries, clothing, and stationery. Holidays are generally a great time to dwell into this space, as you may end up with some major ‘festive’ discounts on essential items.

Educate the young

Often the trick lies in getting the young on your side. The mature ones already understand the need to save and contribute in their own way. But the young take a while to appreciate this. So senior members of the family need to educate the young on savings and make it fun by awarding the points if specific saving targets are met. When indoctrinated with the importance of saving and investing at an early stage in life, the young blossom into more financially aware and savvy individuals.

Identify responsibilities

Most parents prefer not to share all the financial details with their teens, so it’s best to get your finances set initially when the kids aren’t around. Make a note of specific categories that you know they have opinions about and ask them for their input after you’ve determined what you could afford. Then you’re better able to guide a conversation with them, rather than making empty promises or an endless string of no’s and maybes.

Have fun at home

It is natural to expect families to make the most of weekends by going to the movies or dinner. This is the families ‘us’ time when all members get to spend time with each other. But there are equally good ways for the family to have a good time without burning a big hole in the family’s finances on dinners and movies. Order food over the weekend from a takeaway joint and instead of going all ‘fine-dine’, enjoy the simple pleasure of a home-meal while enjoying a good television show or a movie with your family.

You may not get it right in the first go

When you create a family plan and give yourself spending guidelines, there’s an initial period of adjustment. No one gets all the numbers right the first time, so expect to revisit and tweak your plan several times initially, then periodically when circumstances change or when you notice that things are off track.

It can be worth tracking your spending for a few weeks to see where your money is really going. When you track expenses, a useful focus for many is big box stores where you can buy anything and everything, as well as cash expenses.

The bottom line

Managing family finances needs to be a family affair, so do what works better for you and your family. At a minimum, everyone needs to be aware that you’re working towards specific goals and how they can support your efforts. This way there is a takeaway for everyone involved.

(The writer is Head- Personal Wealth Advisory at Edelweiss.)
First Published on Nov 30, 2018 08:07 am

tags #Planning

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