Family financial planning refers to the art of planning and managing household funds deliberately to help maintain a household at both the day-to-day level and the long-term level as well. There are a great deal of families that keep their finances informally using memory or assumptions or short-term responses to bills and expenses. Although this can work on a short-run basis this method of operation tends to leave one in doubt, stressed and a sense of powerlessness. An open system of money takes the place of chance operation. It offers a system that describes how people make money, how they manage the costs, how they develop savings and how they can afford the future. With no such a system, families tend to spend time organizing their finances and seldom feel comfortable with their financial goals.

The financial plan of a family starts with income awareness. The households need to have a clear picture of the amount of money that gets into the home either monthly and the source. One can earn money through income earned in the form of salaries, through business, freelance or through odd jobs. With the absence of income being well-monitored, families may overspend or underspend based on their financial capacity. This ambiguity results in waste of money and debts. Income awareness makes money tangible that is, it becomes a planned and deliberate resource.

Awareness of expenses is also a concern. Housing, utilities, insurance and loan repayments are some of the fixed costs in every household. These expenses are fairly constant every month. Other costs that are variable to the households include groceries, transportation, clothing, school supplies, and entertainment. Variable costs are dynamic and are usually underestimated. Minor purchases made regularly generate high amounts in the long run. Unless these patterns are tracked, the families can be confused as they wonder why the money is disappearing. Clear money system records the fixed and variable costs and shows the true way of money movement.

There is also need to have family financial planning. The importance of all expenses is not equal. There are fixed costs which are vital in the maintenance of the basic living and other costs which are discretionary. In the absence of priorities, decisions on spending rely on the convenience, impulse, or temporary want. Priorities assist the families in determining the expenses that should be secured, those that can be modified and those that can be delayed. Such transparency lowers the emotional decision-making and justifies deliberate spending.

A saving is one of the matters of any financial system. Saving is an activity that is done by many families only when they have money left after the month ends. Actually, it does take saving to be planned. A transparent system of money will consider savings as a normal expenditure and not as an extra cost. This is a slow method of accumulating emergency funds and helping in future aspirations like education, housing or medical care requirements. Even small and regular deposits of savings will eventually build up and generate significant protection.

Money system is also structured making it to be less financial conflict at household level. When the expectations lack clarity, money disputes are likely to occur. One of the family members might be ready to consider a purchase acceptable and another one is going to consider it as irresponsible. In case there is a shared financial plan, the expectations are visible and agreed upon. Such transparency enhances collaboration and tension.

Planning of finances in families helps in long-term thinking. In the absence of a system, the homes are mainly interested in the short-term needs and immediate bills. A financial plan opens up mind to see into the future. This change prompts families to plan and not to respond.

The other significant advantage of clear money systems is stress reduction. One of the causes of anxiety is financial insecurity. Families living without knowing whether they will cover the expenses in the future worry at all times. An obvious system includes predictability. Although there is limited income the ability to know where the money is going makes one feel in control.

Financial planning of a family does not entail elaborate spreadsheets or sophisticated financial skills. Single systems tend to be the most useful since they are less complicated to sustain. The intention is uniformity, not excellence. Even basic enhancements in organization have significant outcomes in the long run.

Proper money system also instils responsibility among children. Children are taught how to manage money healthily when they watch parents making plans, saving and talking about money in front of them. This generates generational advantage.

Financial planning of families is not a single exercise. It is an ongoing process. Incomes are varying, costs vary, family requirements are varying. A proper system is one that is flexible and responsive to such changes.

As time passes, families with well defined money systems gain confidence. They are confident in the fact they can deal with financial difficulties. Their decision making is more transparent. They feel more secure.

Financial planning of a family is all about stability. Stability encourages improved decision-making and health, as well as, improved quality of life.