Within a family, planification is really important. There are many different things that you need to take into consideration when it comes to planning the family. When we talk about planification within the family, the most common thing people refer to when talking about family planning is family size, contraception methods and all sorts of things across those lines.

However, there are other types of planification that are not talked about that much, but that are equally important in the long run: family financial planning. Finances are always the fuel that moves all projects, and when it comes to a big project like a a family, you better have your finances in check.

Why is family financial planning so important?

Families have expenditures that must be attended. The types of expenses of a family can be divided according to their necessity into: essential, dispensable, extraordinary and unforeseen. Essential expenses are those that all families have that guarantee a good quality of life. These include housing, transport, health and other similar areas.


Dispensable expenses are those that we can give up at any given time, but which give us instant gratification, so they are difficult not to do. When we cannot increase income, eliminating these expenses are the main way in which we can save some money. Extraordinary expenses are those that are predictable and non-recurring, such as the income tax return due, annual car insurance or the periodic check-up, this have to be planned to avoid issues on the family monthly budget.

Unforeseen expenses, as the name says… are unexpected. These usually need to be attended with the emergency funds that have been set after a proper financial planning. If you also took into consideration the fact that families should be saving at least 10% of the monthly income, the conclusion is clear: financial family planning is extremely important.
Family planning makes our vision clear
When it comes to family life, financial planning is one of the main objectives that you need to be looking for. The goal of having financial independence to live without worries is a desired state for all families around the world.

  • Family financial planning is the estimation of how our income, savings capacity and expenses will change in the future in order to have an idea of how we will be financially in the near future.
  • This concept was born in the United States in the 60s and 70s in search of answers to all the questions that could influence the finances of an individual and their family.

Planning for the future

If we are planning for the future, we need to be able to make conscious decisions and execute them with clarity and precision. We must be capable of analyzing the evolution of our income in the next few years, whether it comes from salaries, investments and other professional activities.


From that point it is important to determine how you will deal with the family expenses. Each person and family should make a different financial planning according to their starting situation, their age, their situation in their usual life events and their future life goals.

It would be advisable as well to look into protection solutions, like insurance so your family can be protected in case of major inconveniences.

The family planning concept is really similar to managing a business or a corporation. It is understood as the process of creating a complete, organized, detailed and customized financial plan to ensure the achievement of the financial objectives previously established for any company. And the time, expenses and resources needed to achieve them. While a company needs to plan to make profit, families need to plan to have a good quality of life.

Cash flow in family financial planning

There are two streams of cash flow that all families need to consider. The first one is the income and expenses flow. This is the money we get and spend without taking into consideration the “when”. The second one is the flow of receipts and payments (when money comes in and when it goes out). This has an impact on your treasury, that is, on your family “cash”.

This is really important, because let’s suppose you have an income of $1000 every month, but you don’t get paid until the end of the month, you need to come up with a plan wisely using that income during the month, while at the same time saving money and being ready to attend any undesired situation that might get into.

It is fundamental to understand and properly manage the family’s funds. That is, to be sure that we always have enough money to pay for any expenses that arise. And for that, it is crucial to have a sufficient emergency fund.

Requirements for family financial planning

In order to make proper planning we have mentioned that being able to analyze the evolution of our income is crucial to make plans in the long run. Experts in financial planning recommend following these steps.

Set and prioritize

  • Most people go through a series of typical life stages. We are educated for a long time, become emancipated, live as a couple, have children and so on. In addition, we tend to behave in an anticipatory manner, which allows us to discover what our next objectives or life goals will be in the years to come. Whether they are buying a house or a department, which car should the family get, education for the children and similar decisions.

Set timeframes for every objective

  • You should need to set time frames for all the objectives you have established for your and your family life. Establish goals in short, medium and long run. For example, a good short goal would be saving for some family vacation next summer. A medium goal would be setting everything for purchasing a new car for the family. Finally, a long run goal would definitely be getting a home or a department.
  • As you can see, in life there are multi-term objectives, and the success of our financial planning will depend on knowing how to organize our savings today to meet these objectives, and knowing how much to allocate to each one according to its priority.

Make a family budget

  • The next step, after everything goals have been set, it’s the time to start making a plan and putting it into action. If you do not have sufficient income, you should spend less to maintain your planned and necessary savings level, also known as your planned savings, or you should look for other jobs, tasks or investments to increase your income.

Continuous measurement and deviation correction

  • It is necessary to constantly measure, monitor deviations and adjust the budget to achieve the established objectives. All companies do it. And families should do it.
  • It is clear that if we do not have enough income to pay our recurring expenses and meet unforeseen expenses,we will not reach our goals and we will have to review which of them are not achievable as they are set out. The biggest mistake we can make in managing a family’s financial planning is to divert funds from long-term goals to accelerate or meet short-term goals.

How much should you save every month?

In general, a good rule of thumb for saving would be 10% per month. T. Harv Eker is a Canadian author, entrepreneur and motivational speaker. He is the author of the book “The Secrets of the Millionaire Mind”. Harv Eker is known for his theories on wealth and motivation.

One of them refers to the pattern of money and success that we all have engraved in our subconscious. Harv Eker recommends that, when the income from your salary comes in, you dedicate 10% to savings before anything else. In addition:

  • 10% investments;
  • 10% to a savings account for long-term expenses;
  • 10% for the financial education account;
  • 50% to the basic needs account;
  • 10% for the donations account;

After paying for the essentials, we should prioritise savings in our machine. When we get to the end of the month, money isn’t what’s left over (if any).

The 50, 20, 30 theory

In recent years, there is another current of thought that recommends devoting 50% to basic necessary expenses (essential expenses), then 20% for savings and 30% for personal expenses.

According to these new lines of thinking:

  • Half of our income should be able to take care of essential expenses.This includes taking care of debts (monthly mortgage or rent, car payment, etc.), utility bills (water, electricity, gas, telephone, etc.), food expenses, kids’ school, etc. And to do so, you should make sure you have enough income or less debt. There are no tricks or shortcuts.
  • On the other hand, 20% of the money you earn should unquestionably go towards savings and/or debts: but the division of savings or debt payments will depend on your personal circumstances. If you are debt-free or your only debt is a low-interest mortgage, you may want to dedicate the full 20% of your net income to savings.
  • The last 30% is for expendable expenses (leisure, travel, clothes, etc.). These are expenses that can wait or not, but if funds are available, it is not bad to make them. They help us to live a more or less happy life and not to be so worried about the future.

The best way to save is repetition

To save, whatever you save, you have to have a good organization and control of expenses and adopt a solid savings habit. And habits are achieved by the constancy of repetition.

It is thanks to the force of repetition that we forget the effort to save and submit our tendency to procrastinate with the need to save. By repeating a behavior we manage to overcome the tendency to instant gratification that comes from having money to do what we want to do today, as opposed to leaving it saved to cover our future needs.

Knowing how much to save each month will cease to be an obligation and will become a repetitive habit in the future.