When thinking about preparing family financial plan, you first need to consider your family’s specific situation. Ask yourself about the following things:
- Your family’s financial goals. What are you hoping to achieve with your financial plan? What are some short-term and long-term goals you want to focus on? This could include things like saving for retirement, paying off debt, building an emergency fund, affording college for your children, or buying a house.
- Your income and expenses. How much money does your family bring in each month from all sources? What are your typical monthly expenses, both fixed (rent/mortgage, utilities, etc.) and variable (groceries, entertainment, etc.)?
- Your current financial situation. Do you have any existing debt? What’s the state of your savings and investments? Are there any immediate financial concerns you’re facing?
- Your family’s risk tolerance. How comfortable are you with taking risks when it comes to investing? This will help determine what types of investments might be appropriate for your family.
Things to consider about family financial plan
Once you have a better understanding of your family’s specific situation, you can thing about gathering tailored information and resources. In the meantime, here are some general things to consider for your family financial plan:
- Create a budget. This will help you track your income and expenses and see where your money is going. There are many budgeting tools and apps available that can help you get started.
- Build an emergency fund. Aim to save at least 3-6 months’ worth of living expenses in case of unexpected events.
- Pay down debt. High-interest debt can derail your financial plans. Focus on paying off debt with the highest interest rates first.
- Save for retirement. Contribute to retirement accounts like IRAs or 401(k)s if available.
- Invest for the future. Consider investing a portion of your income to grow your wealth over time.
- Get insurance. Make sure you have adequate insurance coverage to protect your family from financial hardship.
- Review your plan regularly. Your financial situation will change over time, so it’s important to review your plan regularly and make adjustments as needed.
Current financial plan for my family in China
I understand you are interested in my current family financial plan. Here is a financial plan for my family both in short-term and long term regarding our financial arrangements.
A. SHORT-TERM:
- Establish Emergency Fund. We intend to keep RMB20,000 as hard cash outside the banking system in case we are not able to use an ATM, but need some petty cash urgently.
- Prepare ‘Floating Money’. We are going to keep RMB200,000 as the 6-month bank deposit. This liquid money can be easily accessed as six months is not a very long time. We may be buying a car. Or, we may use it for an investment opportunity that may emerge in the short-term.
- Add more money into Bank Deposits. I still need to invest around RMB600,000 until the end of this year into 3-year bank deposits to finish building this 2nd passive income stream for my family. Bank Deposits will generate us approximately RMB100,000 year in passive income.
B. LONG-TERM:
- Decide how much to invest on the stock market. I need to think about how much capital to put into stocks in the next few years. I will be purchasing three types of marketable securities: dividends stocks of multinational companies, the ETFs tracking the S&P500 Index and some growing REITs. Mainly, I need to decide on the maximum amount of monthly investments as well as the indented value of the total stocks’ portfolio.
- Buy another property in China to withdraw the Housing Fund. At some point in the future, we will be buying another residential property in my wife’s hometown Zhanjiang. There are two reasons for it. Firstly, to have a much larger home in the future over there. And secondly, to withdraw cash from my wife’s Chinese Housing Fund account. This can only be done by buying a residential property in my wife’s hometown where her household registration aka Hukou is based.
- Consider starting another website. I have had the idea for a while of starting the second website focusing on passive income. My plan was to write about personal finance of my family as I am building passive income streams and to separate the business management topics from the personal finance topics to make each website specializing in different things. However, this plan will not happen this year because running two websites would take so much time which I do not have. It is rather a plan for the future.
Creating a family financial plan is like building a house: you need a solid foundation, a clear blueprint, and the right tools to make it all come together. By following these steps, you can create a solid financial foundation for your family and achieve your financial goals together.
