Family financial check-up: annual guide to budgeting, saving and planning

This guide will show you how to conduct a thorough financial check-up, identify priorities and avoid common pitfalls. Let’s dive into how you can secure your family’s financial health with an organized and intentional approach.

Step 1: Review and update your financial goals

The foundation of any successful financial check-up starts with setting and reviewing your family’s financial goals. Goals give direction to your finances and ensure you’re focusing on what matters most.

Start by assessing the progress you’ve made toward goals you set last year—whether it was paying off credit card debt, saving for a vacation or contributing to your retirement fund.

To make things easier, you can breakdown your goals into two categories:

1. Short-term goals: These are goals you typically can achieve within 1-3 years. Examples include saving for holiday expenses, planning a family vacation or creating a small emergency fund.
2. Long-term goals: These include larger goals that can typically require years of planning and consistent financial contributions, such as buying a home, college tuition or retirement planning.

Once you’ve outlined your initial goals, you can update them based on any changes in your family’s circumstances. For example, have you welcomed a new child, changed careers or experienced unexpected expenses? Adjust your savings targets and timelines accordingly.

Additionally, another helpful way to keep tracking of your goals is to use digital tools or financial planning apps to track your progress toward your goals. Writing down goals and reviewing them regularly will help you stay motivated and accountable throughout the year.

Step 2: Assess your budget and spending habits

After setting up your goals, the next step is to review your household budget. A family budget is a critical tool for managing your finances and understanding where your money is going.

To start, gather last year’s income and expenses to see how well you stuck to your spending plan. Here’s some ways you can assess where you are and update your budget for the new year:

• Track your income vs. expenses: Calculate your family’s total monthly income and subtract essential expenses like housing, utilities, groceries and insurance.
• Identify problem areas: Look for spending categories where you may have overspent. For examples, eating out, entertainment such as movies or concerts and impulse purchases. Consider setting limits on these areas to redirect funds toward savings or debt repayment.
• Update for changes: Factor in any new expenses for the coming year, such as childcare, education costs or an increase in utility bills. If you expect changes in income (like a raise), include those in your new budget as well.

An updated family budget gives you a clear picture of your financial situation and allows you to make smarter decisions about saving and spending. You can also incorporate family budgeting tips, like automating savings transfers or using cash envelopes for discretionary spending, to simplify the process.

By identifying problem areas in your spending and making adjustments, you can better ensure your budget supports your family’s financial health and goals effectively.

Step 3: Evaluate your savings, investments and emergency funds

A critical part of your annual financial check-up is ensuring your savings and investments align with your goals. Building and maintaining a strong savings plan is essential for achieving financial security and preparing for unexpected challenges.

By reviewing your emergency savings, retirement accounts and long-term investments, you can ensure your family is on track to meet both short- and long-term goals.

To begin, you can start with reviewing these key areas:

• Emergency savings: Your emergency fund serves as a safety net for unexpected expenses like medical bills, home repairs or job loss. Ideally, your emergency fund should cover 3-6 months of essential expenses. If you had to dip into your savings last year, focus on rebuilding it. Automating contributions to your savings account can help you reach your target without added stress.
• Retirement: Review your contributions to retirement accounts, such as 401(k)s, IRAs or other investment vehicles. If you’re falling short, consider increasing contributions, especially if your employer offers a matching program.
• Education & long-term investments: For families with children, planning for education expenses is key. Additionally, assess any investment portfolios you have to ensure they’re performing well and align with your risk tolerance and timeline.

Balancing savings for emergencies, retirement, future education and other long-term investment costs will help you secure your family’s financial future. By making small, consistent contributions to each, you’ll see significant progress over time.

Step 4: Manage debt and strengthen good financial habits

Debt can quickly upset your financial goals, so it’s important to address it during your annual financial check-up. Start by listing all outstanding debts, such as credit card balances, personal loans and mortgages.

Then, prioritize repayment strategies based on what works best for your family. Some examples of how to do that include:

• “Snowball method”: Pay off smaller balances first to gain momentum and motivation.
• “Avalanche method”: Focus on high-interest debt first to save money in the long run.

Another tactic to consider involves consolidating high-interest debt or refinancing loans to reduce interest payments. If you’re struggling, seek advice from financial professionals who can recommend customized debt management strategies.

After determining which strategy best fits your family’s financial situation, focus on building other strong financial habits such as paying your bills on time, automating monthly payments to avoid late fees and monitor your credit report annually to check with errors or discrepancies.

By reducing debt and developing good financial habits, you can help set your family up for long-term stability and success.

Start your family financial check-up today

An annual family financial check-up is the key to improving your family’s financial health, achieving your goals and preparing for the unexpected. By updating your financial goals, assessing your budget, boosting savings and managing debt, you’ll create a solid foundation for a secure future.

Take time this year to schedule your financial check-up and involve the whole family in the process. By working together, you’ll strengthen your financial habits, prioritize what matters most and confidently navigate the year ahead.

Ready for personalized guidance? Reach out to Associated Bank today to get expert advice and tools to make the most of your financial journey.