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Gather together one and all. Setting family financial goals.

by:
Penny Pound

Gather round the table one and all. It’s time for mom, pop and the kids to 
set some family financial goals – an important step in creating a budget to pay off debt for any household. The truth is, studies show that people who work towards set goals are far more likely to succeed over those who do not set goals. That’s because goals provide encouragement, focus, and direction to fulfil hopes and dreams. Not to mention, setting and pursuing goals can be fun.

Naturally, goals will differ for every family depending on stages of life, needs, wants, and demands for resources.
Different families have different needs and your budget should reflect your family.
For instance, a young family just starting out might have goals that involve saving for the down payment on a home, increasing income for additional education and training, and starting a small savings account for college expenses. Meanwhile, goals for a family in later years might include saving for a wedding, paying off the mortgage on their home, and putting money towards retirement.
Whatever the case, thoughtful planning and decision-making are needed for goals that Canadian credit counsellors generally agree should fall into one-year, five-year, and life-long plans.
Developing family financial goals can be fun.
The process of setting family financial goals and making a budget that gets the whole family involved can be fun for everyone and particularly informative for the kids. A family council can be organized in the household for just this purpose.
Everyone writes down individual goals that involve money. Goals for each member are rated in importance using stars. One star represents a goal that would be nice to achieve, but it can be delayed. Two stars represent a goal that is needed or wanted, but money must be found to pay for it. Three stars represent goals that the family must achieve.
The star lists are then gathered into one master list, and goals that are similar are categorized together. The family discusses all the pros and cons of each goal until agreement is reached about the goals’ order of importance. From here, priorities are addressed in the context of one-year, five-year, and longer- term time horizons.
The earlier families work toward goals, the better.
The family council’s final task is to create a game plan for how the goals will be achieved. Steps here might involve everything from developing a savings plan, to a family member taking on a part-time job for a set period of time to increase the family’s income.
One thing is sure about creating a family friendly budget: the earlier a family starts saving and investing, the better. Particularly for big-ticket items like a house, or longer-term needs like a college education, regular savings and household equity have a way of growing to surprising proportions thanks to compound interest and market gains.
* Blog content provided through the support of platinum sponsors of Credit Education Week Canada’s Focus Magazine.

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