10+ Elements to Build A Successful Family Finance Plan

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We talk about all sorts of different financial literacy topics here at Family Finance Mom. And sometimes, the amount of information out there to absorb and retain can be completely overwhelming. So this year, for Financial Literacy Month, I decided to create a checklist for you to follow to help you build a successful family finance plan. These 10 basic financial elements should be a part of EVERY financial plan. While they may not all happen this month, my challenge to you is to pick at least ONE of these elements and complete the challenge for it each week this month, and maybe going forward as well, until you complete them all to set YOUR family’s financial plan up for success!


Building a Successful Family Finance Plan

What does it take to achieve financial freedom for your family? It really is as simple as making a plan that helps you live below your means today, so you have funds to save, invest and grow to reach your goals in the future. This ultimately allows you to build a nest egg that generates income for you, allowing you to stop working for income… while also potentially securing income for future generations too.

That’s the end goal for *most* family finance plans… so what are the elements you need to incorporate to get there? See the list below, from the basics, to various forms of savings most families need (and which ones are optional), insurance, which helps reduce the risk associated with your family finance plan, and last but far from least, an estate plan, to protect and provide for your loved ones when you are no longer here to do it yourself.

Family Finance Plan Basics

The basic essentials that are a necessity for every family finance plan, no matter where you are in your finance journey, is a budget and financial calendar.

1. Budget

Whether you are working to pay off debts, saving for a down payment on a home, trying to set aside extra money for a special occasion or vacation, or up your annual contributions to your retirement savings, a budget is how you make it happen.

The Busy Moms Budget Workbook will guide you through building your very first budget if you don’t have one already. And it will also show you how to then use it to guide where your money goes every month, review and adjust it to learn from your spending oversights and surprises, all while helping you find funds for your goals within the funds you already have.

Want to find sources of saving within your budget to reach your goals even faster? Check out these 25+ Ways to Save $500, or compare your budget to the national average budget for a family of 4.

Now, hear this loud and clear: there is no fixed formula that every budget should follow. Personal finance is personal. And your budget should be a reflection of your families priorities and goals.

YOUR CHALLENGE: Build your first budget, if you don’t already have one, and schedule a monthly date to update it every month for the month ahead.

2. Financial Calendar

One of the ways to insure your budget is most successful? A Financial Calendar. Included in the Busy Moms Budget Workbook is also a template to create a Financial Calendar. This is a way to brainstorm all those one-off events, like holidays and birthdays, non-monthly bills or annual lump sum payments – things like property taxes, insurance premiumes, car registrations, sports teams or summer camp deposits.

A Financial Calendar helps you eliminate those annoying budget surprises by visualizing the year ahead of you, as you budget one month at a time.

YOUR CHALLENGE: Create a financial calendar. If you don’t have one already, list the months on a sheet of paper and list all the events, holidays, birthdays, non-monthly payments, insurance renewal periods and list them in the months they are due.

Build Savings

While a budget will help you find extra money every month to save, the next question is what to do with those savings. Here are a few different categories of savings successful family plans incorporate.

3. Emergency Fund

The most critical element to a successful financial plan, after a budget, is an emergency fund. It’s a minimum level of savings you need quick access to in the event that you’re hit with a financial emergency.

How much should your emergency fund be? A good rule of thumb is to start with at least enough to cover your major insurance deductibles. Typically, if you’re paying a major insurance deductible, it’s an emergency. What is your deductible on your health insurance if you or your child were hospitalized? What about on your home if there is storm damage or on your auto policy if you are in an accident?

All of those I would categorize as true emergencies – things you may never have expected, but with a well funded emergency fund, you can plan for them.

Eventually, you will want to build up your Emergency Fund to 3-6 months of living expenses. This is for the real financial emergency – loss of income. After 2020, we are all more aware than ever of how job loss can impact families financially, and how important it is to have funds set aside to cover your bills if it happens to you.

Related Post: Where to Keep An Emergency Fund?

In case of emergency, break the piggy bank

You want emergency funds to be accessible, but you can still put them in a high yield savings account to earn a little interest. I personally use Marcus by Goldman Sachs (<<< you can use this link to open your own and earn a 3-month referral bonus through 6/30/2021), but there are lots of high yield savings account options out there.

YOUR CHALLENGE: Open a high yield savings account and start an emergency fund. Create a line item in your budget to add to it monthly until you hit your savings goal.

4. Sinking Funds

Sinking funds are savings for a specific purpose -NOT emergencies. There are lots of costs that many people characterize as an emergency that aren’t. Christmas, for example. It’s not an emergency, but it can hit your budget hard if you don’t plan ahead for it. A sinking fund is designed for you to set aside a little every month to build towards a larger lump sum you plan to use in the future for a specific purpose.

Other things you might want sinking funds for? Vacations. Home maintenance. New to you car. Major car maintenance. Anything you know is coming that you don’t want to float in a regular monthly budget. The Financial Calendar can help you brainstorm what you might need sinking funds for.

You DO NOT need separate savings accounts for your Emergency Fund and every sinking fund. You can totally keep them all in the same account, and just track the ins and outs on paper or in a spreadsheet. There’s a template for this too in the Busy Moms Budget Workbook. Some high-yield savings account also offer features that let you split an account into different buckets.

YOUR CHALLENGE: Look at your financial calendar and think back over the last year to the events that created unexpected surprises in your budget. What could you have planned for in advance? Make a list of sinking funds, a savings target for each of them, and a line time in your budget to add to them monthly until you reach those targets.

5. Retirement Savings

This is a big one… the ultimate goal for most families is financial flexibility or freedom. To someday, be work optional, and live off of income from your savings, instead of having to work for a paycheck everyday.

Retirement savings is how you get there. There are several tax-advantaged investment account options for retirement savings – BUT most require you to lock your money up until retirement. Early withdrawals can incur steep penalties. To avoid that, that’s why it’s important to have things like emergency and sinking funds – so the money you put aside for retirement, you can leave for retirement

Start here to learn more about the best investment account options for retirement. Wondering how much you need to save for retirement? Check out the retirement calculator below to see if you’re saving enough to achieve the lifestyle you want to live in retirement.

YOUR CHALLENGE: Assess the status of your current retirement savings. Use the retirement calculator to see what your current savings, monthly contributions, and returns will result in when you retire. How does that compare to what you would like to have for retirement? Adjust your monthly contributions accordingly. Set a date to perform this review at least annually.

Related Post: How Much Should I Save For Retirement?

Once your budget is under control, the next most common question I get is 'How much should I save for retirement?' If you can answer when you want to retire, and how much you plan to spend each year, you can use the FREE downloadable Retirement Calculator to tell you how much you need to save in total, and each year until you retire to get there. #retirement #personalfinance #retirementplanning #financialplanning

6. College Savings (optional)

Another area many families include in the family finance plan is college savings for kids. The cost of college has risen at close to 2x overall wages, and many families want to save to help their kids with their education and limit the student loans they graduate with.

That is a great goal… BUT do not put it ahead of saving for your own retirement. And here is why. When it comes to college, students can apply for scholarships, grants, student loans, work-study programs, and there’s a range of price points to choose from as well. When it comes to retirement, for most of our generation, it’s on us and what we save to provide for it.

If that sounds harsh to not give your kids a free ride to college – think of it this way. You could do that, but if you do ahead of your own retirement savings, they will likely end up having to foot the bill for part or all of your retirement. If your retirement is in good shape, saving for kids’ college is a great goal to work towards as part of your family finance plan. Learn more about how parents pay for college and tips for how to prepare for college financially below.

YOUR CHALLENGE: Assess your current family finances and if there is room to contribute to your children’s college fund. If so, open a 529 Plan for each child and set up automatic contributions.

Related Post: How to Prepare for College Financially

Remove Major Risks from Your Family Finance Plan

A major element of every family finance plan should definitely be insurance. Insurance is a financial product designed to remove the risk of expensive costs from your finances, in exchange for a small monthly premium, and the risk is then carried by the the insurance company. If a major insured event happens, the insurance company pays for it.

7. Health Insurance

Medical costs have grown faster than incomes for years, and medical debt is the leading cause of bankruptcies in the US. Health insurance is a definite essential for family finance plans. Roughly half of the population gets health insurance via employer-sponsored plans. For those who do not, the Affordable Care Act of 2012 created state-based health exchanges where you can purchase coverage directly. If cost is an issue, your income may qualify you for aid-based coverage. Subsidized coverage is available via Medicaid for need-based coverage, CHIP coverage is explicitly for kids, and Medicare provides coverage for the elderly.

Make sure you review your coverage annually. Most employers have a window every year to review and change your benefits plans. State health exchanges also have an annual open enrollment period. Understand your annual deductibles and premium requirements. Know that you can typically lower your monthly premiums by choosing a higher deductible, but recognize that may mean higher out of pocket costs for you in the event of a medical emergency.

Make sure your deductibles line up with your emergency fund savings, in case your need to cover them. For families with high annual deductibles, you may also be eligible to use a HSA, or Health Savings Account. These work similarly to a 401k, but withdrawals are tax-free for medical purposes. You can learn more about HSAs here.

YOUR CHALLENGE: Mark your annual open enrollment period on your financial calendar. Review your annual deductibles and make sure your emergency fund is large enough to cover them. If you are eligible, consider opening an HSA and saving for high annual deductibles there.

8. Property Insurance – Home & Auto

Your home is most family’s single largest investment, while your car may not be far behind, while also potentially being many family’s greatest source of liability. Property insurance protects the value of these assets, while also covering you for potential liability as well. Even if you don’t own your home, renter’s insurance will protect the assets in your home and provide liability coverage for you.

If your house burns down or your car is stolen, property insurance will provide the funds to rebuild your home or replace your car. If someone has an accident on your property or you injure someone in an accident with your car, property insurance protects you from those potential liabilities as well.

Property insurance coverage also typically renews annually, or in some cases semi-annually for auto.

YOUR CHALLENGE: Mark your annual or semi-annual property insurance renewal date on your financial calendar. Consider setting up a sinking fund to pay your annual or semi-annual premium to save on monthly payment charges. Review your annual deductibles and make sure your emergency fund is large enough to cover them. Review your coverage, both for property limits and liability, and make sure it does not need to be adjusted to account for rising replacement values (especially for homes) or your financial means.

Related Post: What Every Mom Should Know About Property Insurance

How well do you understand your homeowner's and auto insurance policies? Make sure you have sufficient personal property insurance with these 6 questions answered by Daigle & Travers Partner, Eli Zimmer | Finances | Insurance | P&C Insurance | Family Finances | Personal Finance | Financial Savvy | #personalfinance #insurance #propertyinsurance

9. Life Insurance

If you or your spouse died tomorrow, would your family finances ever be the same again? That’s what life insurance is for… Every family finance plan should include life insurance coverage for at least as long as you have minor dependents who rely on you for their financial well-being.

Term life coverage is the most affordable insurance coverage out there in terms of the annual premium vs. the payout. You should have coverage at a minimum to replace potential loss of income, as well as to cover any major financial obligations, like your mortgage. You may also want coverage even if you are a stay at home parent – as without you, your spouse would have to incur additional costs for childcare.

Life insurance, like all insurance products, is designed to remove catastrophic risk from your family finances. You are not replaceable and your death would be devastating to your family. Life insurance removes at least the financial burden that would follow in the event of tragedy.

YOUR CHALLENGE: If you don’t already have coverage, get life insurance coverage. Term life coverage is sufficient for most families and likely far more affordable than you think for priceless peace of mind. If you do have life insurance, evaluate your coverage. If your income or financial obligations have substantially changed, make sure your coverage is still adequate for your family’s financial needs.

Related Post: Why Life Insurance for Parents is Essential

10. Umbrella Insurance Policy (optional)

If you own a home, make substantial income, and/or have significant net worth, you may also want to consider an Umbrella Insurance Policy. An Umbrella Policy provides additional liability coverage over and above your home and auto policy coverage. It’s to protect you in the event you are sued, which in our current society, is far more common than people realize.

It sits, like an umbrella, over your other insurance policies and kicks in where they leave off. If you are in a terrible car accident and someone sues you and is awarded $2 million, but your auto coverage only has $1 million in liability coverage, you could have to liquidate everything you own and potentially have your wages garnished to pay the remaining award. An Umbrella Policy of $1 million would cover it.

You can learn more about Umbrella Policies in the post above about Property Insurance.

YOUR CHALLENGE: Review liability coverage under your home and auto insurance policies and determine if you want additional coverage under an Umbrella Policy. Request a quote from your insurance provider.

Your Family Finance Plan After You’re Gone

No one likes to think about their own mortality – but one of the great inevitabilities in life is at some point, we won’t be here anymore. Hopefully, it won’t be for a long time, but we don’t have control over that either. A will or estate plan gives you control over what happens to your children and your assets when you are no longer able to make those decisions for yourself.

11. Will (at minimum) or Estate Plan

A will or estate plan gives legal directives on how you would like your assets divided after your death. An estate plan is more comprehensive and, in some states, is necessary to avoid probate court, which can be costly and makes the details of your family finances public.

When you set up a will or estate plan, it should also include other legal directives, including:

  • Guardianship – who do you want to be responsible for your children should you or your spouse die while they are still minors
  • Power of attorney – this appoints someone to make financial decisions on your behalf. This person could pay your mortgage, file your taxes, and handle any other financial decisions necessary for your estate.
  • Advanced healthcare directive – this appoints someone to make healthcare decisions on your behalf, in the event you are unable to make them for yourself. This is also known as a Living Will.
  • HIPPA authorization – this allows appointed individuals to speak to doctors on your behalf and access your medical records

Some of these can even be essential before your death, in the event that you become incapacitated and unable to do and make these decisions of yourself. Again, no one wants to think about these things until they have to – but by then, it can be too late. If you have children, it is essential you think about these things for them now. It is also a complete myth that estate plans are only for the wealthy. If you own a home, have any amount of retirement assets or life insurance, you have more than enough at stake to justify an estate plan.

YOUR CHALLENGE: If you do not already have one, schedule an appointment with an attorney to make a will or estate plan. Do what you can afford, but make sure you understand the differences, the laws in your state, and that you feel your wishes are legally protected and will be followed.

Related Post: 10 Things to Know About Will vs Estate Planning


So, who’s up for the Financial Literacy Month challenge? Which elements will you choose to tackle in the next few weeks? How many elements do you already have in place? Encourage your friends and family to take the Financial Literacy Month challenge too… share this!

Want to keep tabs on your progress? Download a free printable Family Finance Checklist and check the box as you complete each challenge.

Spread the word… PIN THIS!

Thank you for sharing!

About Meghan

Meghan spent nearly a decade as a Financial Analyst, before spending the last 7+ as a SAHM to three little ones. She shares simple money tips for moms to help your family reach your financial goals by building a financial plan you can LIVE with! You can learn more about her background in finance, catch her daily on Instagram and Facebook, and her weekly live discussions in her community for Family Finance Moms.

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  1. […] to three children, Meghan used her knowledge and experience as a financial analyst to develop the Family Finance Mom platform. Her podcast, Finance Explained, provides weekly financial and economic news in relatable […]

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