Family Financial Planning Top 5 Tips (2022)!

Do you intend to start a family soon? Remember to include the financial issue into your strategies at every chance. This checklist provides the most important information you'll need to know.

In Germany, a family's financial status is one of the most stressful aspects of their existence. In most cases, poor financial planning is to blame for financial problems. As a result, we have compiled the six most important rules for you that every family should consider while planning their own financial affairs, which are mentioned below. Let's get started!

1. Make advantage of a family book!

The most efficient way to limit your spending is to keep a budget. Whether it's diapers, school trips, food, or clothes, the organization keeps track of everything and evaluates it once a month to make sure it's still relevant.

We routinely squander our money on items we do not require. If they have children who are growing rapidly, parents might look for clothing on second-hand platforms. This is a classic win-win situation in which you save money while simultaneously contributing significantly to climate protection. Here are some additional money-saving ideas:

  • cut your own hair
  • Go shopping with a plan
  • Use cloth diapers
  • Take advantage of family discounts
  • Do not travel during school vacations.
  • Buy used equipment
  • Organize baby shower
  • Free food (food sharing)

It is easy to lose track of things, especially because of the great responsibility that one has as a parent. Determine your financial requirements: How much does it cost to have a child? Do you know how much it costs to raise a child from the age of three to the age of eighteen? A total of 150,000 euros is possible.

Extensive investigations done by the Federal Statistical Office indicate this. As a parent, you'll need to budget for roughly 600 euros in extra costs each month. Furthermore, for young people who want to pursue a master's degree and maybe study abroad for a semester, the expenses grow to an average of 230,000 euros until they reach the age of 25.

Of course, the government provides some aid to parents in the form of child benefits and other tax advantages. Nonetheless, significant financial planning is essential early on, as total costs are still far from being covered by available assets.

2. Multi-account model for organizing finances

A multi-account method is perfect for arranging your assets like a family. Instead of accumulating all of your revenue in a single account, you allocate your income to multiple sub-accounts at the beginning of each month to avoid overspending.:

  • Consumption report (fixed costs and variable costs)
  • Savings account (nest egg)
  • other financial objectives (vacation)
  • Account for wealth (retirement provision – custody account)
  • Children's asset account (depot)

The financial intricacy of a family's financial condition grows with the addition of children. You may simplify the procedure while also automating your savings habit with a multi-account plan, allowing you to stick to your budget without difficulty.

3. Having a nest egg provides financial security.

If you have children, you should reevaluate your financial situation as soon as they arrive. Your needed living expenditures grow as a result of the monthly additional charges, which must be met from your retirement savings account.

A multitude of events might cause families to find themselves suddenly in financial hardship.

  • Sudden unemployment
  • illness and absenteeism
  • (Major) repairs in the apartment/house
  • new acquisition (e.g., car, washing machine, refrigerator)

In any case, be certain that you are financially solid in order to prevent raising your level of stress during such times.

How large should your emergency fund be?

Your emergency fund should be sufficient to cover your living expenses for the next six months, if not longer. Take the subject seriously if you want to keep your cool amid "turbulent" circumstances.

The overall cost for a household of three with monthly costs of roughly 2,300 euros would be 13,800 euros. The funds should be stored in a money market account, where they may be accessed at any time.

4. Provisions for the children

You can establish a solid foundation for your children's future by starting early with a wise investment. Studies, your first apartment, and your first car are all costly investments, but if your budget for them ahead of time, you will reap the advantages afterward.

As previously said, it is vital to keep a household book and be aware of the higher costs that will be made as a result of this. You should intentionally spread your savings rate over a variety of savings goals (vacation, nest egg, taxes, and so on), as well as establish a savings account for your children and grandchildren.

Because this is a long-term goal (and you should start as soon as feasible following delivery), you should invest the funds in a broadly diversified ETF portfolio. This ensures that your savings grow exponentially as a consequence of the compound interest effect.

5. Set yourselves common goals

Everyone should be running in the same direction at all times. It is critical to have an open talk about your goals and desires, and monthly financial dates are great for doing so after the kids have gone to bed.

Do any of you want to change occupations or start your own business? Then you and your partner should have a conversation about it as soon as feasible. The sooner you can begin, the better.

Include your children in your financial planning as soon as they reach the legal age of consent, so they can understand what you're going through. This suggests that they will be able to better categorize your choices.


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