My parents were big on annual vacations and every summer we would go to an amusement park.
Some years we drove 4 hours south to Six Flags over Texas; other times we would drive 7 hours north to Six Flags St. Louis. In the winter we would head west to go skiing in New Mexico or Colorado.
As a father now, I can understand the level of planning my parents had to go through; especially when you consider that they pulled this off with just a map — and eventually a crumpled set of Mapquest directions. But each year we arrived at our destination like clockwork.
Just like any successful road trip, setting financial goals as a family requires many of the same elements. Consider this your roadmap to setting family financial goals.
Having clarity on your goal is always important as an individual, but it is even more important in a family dynamic. This is because more people are involved and may have different perspectives on what accomplishing that goal could mean.
For example, setting a goal to “save more money in 2021” could mean saving $100 per month or saving $10,000 by the end of the year depending on who you ask.
Start by spending time being as clear as possible on what the goal is — that could look like calculating a specific dollar amount or visualizing what the end result may look like (a dream vacation, for instance).
Instead of simply having “save for college” as a goal, saying that you’re going to save $25,000 for Spelman College by 2038 adds more clarity. It also paints a picture, one that can help keep you motivated when things get tough.
It is also specific in terms of the amount, the location and the time which just so happen to be the key details when you’re taking a trip. Where are you going? When are you getting there? How far away is it? These are all questions you need to answer for successful goal setting.
Making it Automatic
After entering your destination into your GPS, you now need to complete a series of actions to reach that goal. The best way to do that is by working backwards from the desired goal to the where you are right now.
Using our earlier example, there are 18 years to save $25,000. That breaks down to about $1,900 per year or about $155 per month. With that information, you can set up an automatic transfer from your checking account to a 529 college savings plan to reach your goal.
Keep Your Eye on the Calendar
Your family goals do not happen in a vacuum, because your plan involves other people. Consider taking the time to plan with a calendar or a general timeline to account for potential changes or pitfalls.
For example, how does the family budget change when you are no longer paying for daycare? How would it change once the kids move out? Should you allocate more to groceries and utilities if the kids are at home during the summer (or during quarantine)?
Having a calendar helps you be more specific about planning ahead and can help give a true sense of how feasible those goals are given the desired date.
Write it Down
Did you know that by simply writing down your goals you are 42% more likely to achieve them? According to writer Mark Murphy, “Vividly describing your goals in written form is strongly associated with goal success, and people who very vividly describe or picture their goals are anywhere from 1.2 to 1.4 times more likely to successfully accomplish their goals than people who don’t.”
For family financial goals consider writing the goal on the fridge or on a piggy bank to help motivate younger members of your family. You could also find a picture of the goal and make it the lock screen on your phone or computer or put it on your calendar or in your wallet as a constant reminder of what you’re striving for and why.
Set Regular Check-Ins
While you do want to automate your goals, you don’t want to necessarily take the “set it and forget it” approach. It is important to check in on those goals monthly or quarterly to make any needed adjustments.
Depending on the type of goals you have it might be dependent on prices, the stock market or other factors that may change as you and the family are approaching the goal.
Set Milestone Celebrations
Decide on some milestones and celebrate when you’ve reached those mini-goals.
For example, if you are saving for a trip to Disneyland you might celebrate when you’ve saved enough for the park tickets. Then again when you have enough to rent the hotel room. And so on.
This makes it feel like real progress is being made, especially for little ones who don’t have much concept of large amounts of money.
And note that “celebrate” doesn’t need to be an expensive dinner out. It could mean baking cookies or having a family movie night. Anything fun that will keep engagement for the goal alive.
Here are some more ideas to keep your motivation up.
Don’t Be Afraid to Adjust
Setting goals and accomplishing them isn’t about being perfect, it is about making the right adjustments to overcome any obstacles that may arise.
Never be afraid of making small, occasional changes to your goals to ensure that they still fit for where you and the family are in your financial journey.
Communicate and Educate
This is likely the most important step, especially if you’re looking to teach your children about money. Any goal that is set should be clearly communicated with the entire family.
Like a TV chef, you have to describe the process and communicate as you’re going along. This helps to keep everyone on the same page and allows them to understand your goal-setting process. These are the financial habits that they will inherit and use to help build wealth in the future.
Setting financial goals as a family is totally possible. The main thing is to be sure that everyone is clear on the goal and what needs to be done to achieve it.
Then, keep your eye on the progress and make adjustments as needed. Soon, your whole family will be setting and achieving their own personal financial goals.