Whether you are thinking of having children or already have them, a solid financial plan is an absolutely essential part of managing a family. It is both the only way to guarantee security and the best way to save up so that you and your kids can enjoy things like holidays, activities, and even a good education.

Your financial plan should be made up of three essential components: your day-to-day budget, your savings, and any insurance plans you select. Together, these will cover your expenses, build your assets, and protect you from unexpected financial blows.


Your first step should be to find out how much you are currently spending and where you can cut back. You will need to keep track of your household expenses so that you can set aside the appropriate amount of money for your family’s goals: check out this list of five household budget templates by HuffPo to get you started.

An often-quoted rule of budgeting is the 50/30/20 rule: 50% of your after-tax income should be spent on your “needs” (such as food, housing, and insurance), 30% on your “wants” (such as travel, activities, and leisure) and 20% should go to savings and debt repayment. Of course, this is only a rule of thumb, but it provides a good starting point if you’re new to budgeting.


The main things that most people need to save for are their retirement, their children’s college education, and an emergency/rainy day fund:

● Conventional wisdom says that you need $1 million for a comfortable 30-year retirement, but this can obviously vary greatly depending on how (and where) you intend to live in your old age.
● Parents contribute an average of $58,464 per year toward their child’s college education, with the average degree lasting four years
● The size of your emergency fund will depend greatly on your insurance policies (see below), but three to six months’ salary is the general guideline. You will need to make sure you aren’t putting too much aside here: this guide by NerdWallet explains why and how to calculate the perfect goal amount for you.

These figures may seem intimidating, but remember that a good savings account will work for you and grow your money. As long as you choose the right accounts and use compound interest in your favor, you will be able to save much more than you might expect.


Life insurance becomes absolutely essential when you have dependents, like a spouse and children. Before purchasing life insurance, you should understand the different types of policies, as well as how the cash values and premiums vary. The good thing is that once you retire, you can actually sell your life insurance policy to free up some cash.

If you are a homeowner, home insurance is usually required as part of your mortgage agreement. It protects you from potential threats like fire, flood, and theft. It is not to be confused with a home warranty which covers the natural breakdown of your appliances, and which could also be worth investing in.

Aside from these two, your insurance needs will vary. You may want to set aside money for things like pet insurance, private health insurance, or even your own end-of-life arrangements. Indeed, it may not be a happy thought, but you can actually save your family a lot of money and discomfort if you prepay for your funeral. This is a good example of insurance versus savings: you can either create a dedicated savings account or buy an insurance policy such as a pre-need plan or final expense insurance policy.

Financial planning can seem intimidating, especially when you add kids to the mix. In reality, it’s a matter of using common sense to make the most out of your resources. The right combination of budget, savings, and insurance will help you protect your family against anything life throws at you, while allowing you to thrive and plan for a happy, comfortable future.

Sara Bailey