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A clear-cut checklist for getting your family finances in order

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8 mins

There’s an old saying that goes:

“A New Year’s resolution is something that goes in one year and out the other.”

Many parents with growing families and growing financial responsibilities often resolve on January 1st that “this is the year I get my financial house in order.” Unfortunately, that resolution, like many others, is more often broken than kept.

That’s not meant to discourage you if you haven’t kept that resolution in the past. This article is here to give you some new insights, and some reminders, on getting your family finances in order. We’ll provide you with a checklist that you can print and post somewhere you can see for the next 90 days and use as a blueprint for taking action.

Here’s your list with some practical advice attached to each item. At the end of the article, we’ll have the checklist in summary form for you to cut, paste, and print so you can post it at home or in the office.

Create a smart, flexible budget

Do you have “too much month left at the end of the money?” If that rings true for you, or if you’re just getting by each month without much margin for unexpected expenses, it’s crucial to your financial health that you put together a budget and stick to it.

There are plenty of budgeting worksheets available online. They’ll encourage you to set aside some time to put your monthly income in one column and your monthly expenses in another column. Then, add both columns up and compare them. Hopefully, the expenses column is less than the income column, meaning you have some breathing room at the end of the month.

If your expenses exceed your income, you essentially have two choices:

  1. Increase your income
  2. Decrease your expenses

It may take you a while to boost that income, either with a raise at work or starting a side hustle, so you’ll probably have to reduce your expenses. That’s never fun to do, but we can all find some things we can do without for a while until our income increases.

[ Related: 26 of the best personal budgeting tips ]

Build an ample, reliable emergency fund

One line item you need to have in your budget is a monthly deposit into an emergency fund. Yes, it’s another expense, but it’s indispensable. Appliances conk out, vehicles break down, and kids suddenly need braces.

You want to have 3-6 months of your family income in your emergency fund to be prepared for that big, unexpected expense that always seems to come at the wrong time.

If putting a slice of your paycheck into your emergency fund every pay period seems like a yeoman’s task, start small. Whether it be a few dollars or a small percentage of your income, put it aside each pay period. There will come a day when you’ll be glad you did.

Participate in your company’s retirement plan (or set up your own)

The “young you” will someday be the “old you.” You may not think that’s a pretty picture, but it’s going to happen. When that time comes, you’re going to need the money to maintain your standard of living while you enjoy your retirement. Perhaps you’ll want to travel to places you’ve always dreamed of visiting, or maybe you’ll just want to spoil the grandkids. But, no matter what you’d like to do, it’s going to take money.

You can have what you need when you retire if you consistently put money into a retirement account and let the interest compound for as many years as you can. Of course, the younger you are when you start, the better since it allows plenty of time to let your retirement fund grow. But no matter what your age is – it’s never too late to start.

If your company offers a retirement savings plan, like a 401(k), take advantage of the tax advantages and put in the highest percentage of your salary that you can. If your employer offers a matching contribution, at least make your contribution be an amount that receives the full employer match.

If you’re self-employed, set up your own retirement plan. You have many options to choose from: IRA, Keough Plan, SEP, Simple 401(k), and more. Your contribution also comes with tax advantages.

And, if you are employed by a company that doesn’t offer employees a retirement plan benefit, get with your financial advisor or accountant and explore your options. You’ll be able to set aside money and have Uncle Sam help you maximize your savings. Your advisor can tell you how.

[ Related: The American retirement savings crisis, explained ]

Set up a 529 college savings plan for the kids early

If helping to pay for your children’s education is on your financial radar, a 529 college savings plan is a great way to help. The contributions you make aren’t tax-deductible, but no taxes are due on the earnings of your investments inside the account. And, another big plus — when the time comes to take the money from the account to help the kids, those withdrawals are federal income tax-free. Ask your financial advisor about setting up a 529 fund.

Protect your family with health, disability, and life insurance

Another necessary expense is monthly premiums for the “big three” type of coverage:

  • Health
  • Disability
  • Life

Health insurance

You need health insurance to avoid being wiped out by a catastrophic medical bill because of a major illness or accident involving a family member. As you know, health insurance is expensive, and costs continue to climb, but there are options like a High Deductible Health Plan (HDHP) or an HMO that can give you great protection.

[ Learn More: HMO vs. PPO plans: ]

Disability insurance

Disability income insurance is another must-have. You can’t risk your income being cut off due to you or your spouse not being able to work because of an injury or illness. Your monthly expenses will continue to be there, even if your paycheck isn’t. For 1% to 3% of your annual income, you can protect your paycheck and your family. So don’t put off getting disability insurance. Put a star next to this one on your checklist.

Cross disability insurance off your checklist with Breeze. Get started here.

Life insurance

If your family wouldn’t be able to continue living in the manner you want them to if you or your spouse were to die and your income was taken out of the equation, you need to have life insurance. Unless you want a policy like whole life that has both a death benefit and a savings portion, term life insurance should be more than adequate. The younger you are, the less you’ll pay each month; so, get it as young as you can. If you don’t have life insurance, you’ll never be younger than today.

Keep a “fun money” account, too

Few things in life are as memorable as vacations or special trips you make, either as a couple or with the whole family. We’ve been talking about putting money aside for serious purposes, like retirement, college, and insurance; but, you need to enjoy life as well. Set up a savings account that’s just for your family to have some fun together. Whether it be a trip to Disney World or a local outing to play miniature golf, use that fund to enjoy time together.

Reviewing your checklist

Here’s the checklist for you to put on your bathroom mirror, your fridge, or anyplace else that you won’t be able to avoid seeing it. Commit to checking off each of these six steps in the next 30 days, which are essential to good financial health.

  • Create a smart, flexible budget
  • Build an ample, reliable emergency fund
  • Participate in a retirement plan of some type
  • Set up a 529 plan for the kids’ education
  • Protect your family with health, disability, and life insurance
  • Keep a “fun money” account, too

Get started today. You won’t believe how much better you’ll feel, and sleep, knowing your financial house is in order.

The information and content provided herein is for educational purposes only, and should not be considered legal, tax, investment, or financial advice, recommendation, or endorsement. Breeze does not guarantee the accuracy, completeness, reliability or usefulness of any testimonials, opinions, advice, product or service offers, or other information provided here by third parties. Individuals are encouraged to seek advice from their own tax or legal counsel.

— Published August 13, 2021
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