Start with a ‘money summit’

The first step in family financial planning is to sit together for an open and honest discussion about money. This ‘money summit’ sets the stage for working together. Share things like:

• Your beliefs, feelings and experiences with money growing up
• Financial goals and dreams
• Ideas for how money should be managed day-to-day

The conversation might get emotional at times. Let each other speak without judgment. The goal is understanding where each of you is coming from so you can find common ground. Get curious by asking questions if you don't understand someone's perspective.

Identify shared financial goals

With thoughts and feelings about money out in the open, it’s time to start identifying financial goals. Come prepared with some of your own ideas, like saving for college, buying a home, taking a dream vacation, or starting a family business.

As a family, determine which goals are top priority. Think short-term (1-2 years), mid-term (3-5 years), and long-term (5+ years). You won’t be able to accomplish every goal right now, so focus first on those that have the biggest impact and excitement for the family.

Get real about your current finances

Now it’s time for a reality check. Gather recent bank and credit card statements, loan paperwork, and so on. Make a list of monthly household income and expenses. If needed, use budgeting tools and calculators to get accurate totals.

The goal here is full transparency about what’s currently coming in and going out. This gives you a baseline for creating a new budget aligned with your financial goals. It also helps uncover areas of overspending that can be reduced.

Brainstorm and set your family budget

After identifying your goals and current financial status, you can now start to create a monthly budget that supports achieving future plans while covering present needs. Think through categories like:

• Housing and utilities: Your largest monthly expense, be realistic about costs.
• Transportation: Car payments, insurance, gas, repairs and so on.
• Food: Groceries, dining out, school lunches, etc.
• Personal: Clothing, self-care, hobbies, memberships.
• Entertainment: Streaming services, events, travel, and more.

Brainstorm ways to trim expenses in each area. Get creative thinking about lifestyle changes that could free up more money for goals like college, retirement, or family vacations. Working together can lead to better ideas and buy-in when sticking to the budget long-term.

Automate what you can

Managing money day-to-day can be tedious. Make it easier on yourself by automating payments for things like utility bills, loan payments, insurance premiums and contributions to savings and investments. Set it up so the money moves without you having to think about it.

This prevents late fees if you forget payments. Plus, it builds savings and works toward goals passively over time. Start small if needed – you can always adjust amounts later as finances allow.

Check in regularly

Like anything in life, family finances will evolve over time. Schedule a monthly meeting to review your budget and goals together. Then make changes if needed based on shifting priorities or circumstances.

These financial check-ins keep you engaged and aligned. Goals may shift too. Building flexibility into your financial plan helps it succeed long-term.

Don’t forget to celebrate successes.

What not to do when you start a family budget

Creating and sticking to a family budget takes work. Going in, there are some common mistakes to avoid from the very beginning:

• Not getting buy-in

  Imposing a budget never goes over well. Make sure to align and agree together from the start. Discuss priorities and find ways to incorporate those into the spending plan.

• Failing to track spending

  You crafted a thoughtful budget aligned with your partner’s financial goals. But how will you know if you're sticking to it? Sign up for a budgeting app that links to credit cards and bank accounts. This way spending gets tracked in real-time for all.

• Avoid too much restriction

  Completely restricting ‘fun’ categories rarely works long term. Allocate reasonable amounts for dining out, entertainment, hobbies and so on based on true expenses. Slowly reduce discretionary budgets as needed rather than cutting cold turkey.

Not planning for surprises

Life throws curveballs - job changes, illnesses, leaky roofs, crashed cars and so on. Build savings directly into your family budget for both expected ups and downs like holidays or back-to-school costs and the unexpected like repairs and medical bills. Start small and keep growing this emergency fund each month.

You don’t have to do it all yourself

If you're feeling overwhelmed, meet with a financial advisor. Get their input on priorities, trade-offs, and setting budgets that make sense. Ongoing guidance helps families stay on track toward short and long-term money goals over time.