Running your household finances can be overwhelming at times. Financial situations constantly change, therefore we have to adapt the way we run our family finances. Creating a financial blueprint is essential to having a smooth operation of your money.
If you choose to put effort into broadening your financial knowledge, then your money situation can flourish.
Having a blueprint could even help you make money.
Planning is essential in laying a good framework for any situation. Not just financial.
If you do not have a plan or a clear visual of your finances, it will be extremely difficult to know where you may need to make changes to the way you run your household finances.
Questions such as, “is your financial situation where you like it to be”?
Is it mediocre and could use a makeover?
Or, is it not where you would like to see it, and you know you need to make some adjustments?
Whatever the case may be, take a look at how you manage your family's finances, and assess it. Just come up with an honest answer to yourself as far as if it needs to change or not.
To be aware of your financial situation is a simple rule for conquering the successful management of your finances. A simple process is all you need to get on track.
Create your Financial Blueprint to Make Money
What is a financial blueprint?
A blueprint is an outline of anything that needs to be constructed and is a vital part of building anything.
Without a plan, how would you know how to build something? You pretty much wouldn't. It would end up in chaos.
So, managing your family's finances is no different.
A financial blueprint is a phrase referring to a plan you have regarding your household finances.
It's the kind of relationship that you have with money and how you interact with money.
When people say that they are struggling financially, a lot of times its due to a lack of planning and understanding.
Your blueprint just has to be some kind of outline to let you know what your goals are, and what needs to happen to achieve them. It helps you to build a solid foundation, in which you can create a healthy relationship with money.
Why do you need a financial blueprint?
Having a foundation for managing your finances is imperative for any household. Not only does it map out your financial goals, and provide a list of expenses vs. income, it provides insight as to how you think about money and how much money you have.
A blueprint basically lays on the table where you are today, where you want to be in the future and then how you are going about getting there.
Our situations change all the time, so it's good to refer back to your plan periodically.
Your outline will help you with your financial decision-making and how you are going to change your behaviors in order to achieve your goals.
As with anything, you need methods and strategies clearly defined, so that you know what you are supposed to be doing with your money.
Another reason that it's important to have a good outline of your financial situation is that it will keep you from making oversights when it comes to doing items with your finances.
An example of a simple oversight that could turn into being a huge mistake is having a spouse listed as your beneficiary on retirement accounts after a divorce. Or not having your children listed as beneficiaries or other people you want listed.
If you are looking at your financial plan periodically, you will see these to-do items and get it taken care of.
How your money blueprint affects others
Quite honestly, your money blueprint affects way more people in your life than just yourself.
Did you ever notice that your own thoughts about money are stemmed from how money was handled when you were growing up?
Whether you came from a challenging financial childhood or a comfortable financial lifestyle, it has directly affected your own relationship with money.
You may say to yourself, wow, I grew up in a home where we financially struggled and I do not want to live like that as an adult.
Or, you may have grown up in a well off home life, and thought to yourself that you would love to maintain that same lifestyle as an adult.
Or you may think that you do not like living with a lot of high-end items and you would prefer to lead more of a minimalist lifestyle.
Whatever your opinions may be, it has been molded by your childhood experiences with money.
So how does your own money plan affect other people?
It goes to show that the children that you are raising in your own home are going to be directly affected by seeing and watching the financial decisions that you make.
If you want your kids to grow up having a healthy relationship with money and make good decisions, they have to see you do it.
Even if you and your partner are struggling financially, you do not have to keep voicing to the kids that you don't have money for this or money for that.
On the flip side, it is extremely healthy for you to let the kids know that you may be on a budget.
That instills good values in the kids to let them know that you can't impulsively spend on everything you want.
It just isn't great, if the kids are constantly hearing negatively about money.
You want them to grow up knowing that the family may be on a tight budget, but that is all the more reason to work hard for things you want to spend on.
Some questions your blueprint should cover
In order to know how to create a good financial foundation, you have to know what questions you need to be answering.
Coming up with the questions is just as important as the answer. This is because, if you are truly trying to put yourself in a better financial situation, you need to be asking yourself the right information.
For example, it is not as relevant if you have a question on your blueprint about how much money you want to have at retirement. The more relevant question may be, how much can I save per month towards retirement.
Your long term goals can be the dollar amount that you want in your retirement accounts in decades to come.
Your blueprint is more of a big picture of what's going on in your financial situation now and in the short term future.
1. What roles do the other people that share money with you have?
2. Does one of you need to get impulsive spending under control?
3. Do you just need to cut a few expenses out that can be controlled?
4. Is spending not an issue, but you could be better at putting money in a savings account?
5. Are you a spender or a saver?
6. Should you combine finances with your partner, or not?
7. What is your opinion on investing?
8. What is your situation with work?
9. What kinds of things can you cut out of your monthly budget and what can you not live without?
10. Are you willing to take financial risks?
These questions will help you gain a much more clear understanding of your big picture.
It's basically a way to have you think about what all is involved in your financial belief system. These are things most of us don't really think about too much, so when you sit down to make a financial plan and goals for yourself, you can start to dig deep into what you believe.
That will help you have a better situation with money today and in the future.
Without a plan, your money is potentially not being managed well at all.
This could lead to extra spending that you aren't realizing you are doing. Or, it could lead to a lean savings account when you could have had extra money to put in it.
Be honest to yourself if you need to cut spending on some “extras” during the month.
Example of a financial blueprint
A great example of a financial blueprint would be an excel spreadsheet.
- List out all your bills
- Put accurate amounts for your bills or take averages
- List your savings account as a bill – contribute to it
- Get involved in investments and list that out as a bill
- List groceries, eating out and gas as bills
- Total your spreadsheet and subtract from how much income comes into the household
- This is your leftover money for the month
Now you know exactly what that month's expenses total, compared to how much income is brought into the household. This is crucial information that you can use to plan your month financially.
Understand your blueprint
This is the number 1 rule in learning how to manage your family's finances. You must understand the blueprint that you made. This is not always going to be a task that you really want to do, but it is necessary. You must take a hard look at your situation and know the answer to a few questions.
Understanding exactly what your monthly expenses are and how much income will be brought in that month, is key. Once you have that knowledge, you can financially plan your month accordingly.
This all goes into how you can make money in your month. Understanding and having a financial blueprint helps you not spend too much money in your month and helps you follow a plan. This, in turn, helps you have more money in your month because you are not spending impulsively. You also have your financial goals in front of you so you are more likely to stick to your plan.
How do you make money by having a financial blueprint for your money?
The answer is simple. If you know where your money is going each month, then you can save money and that means you are making money. You may be spending on extras that you didn't realize you were spending on. Or impulsively spending, and you didn't even think about it.
Once you got all of your expenses written down, it will bring your attention. Now, that you are aware of some impulse spending going on, you can make a plan as to when you spend on those items. Check out this article on how to cut your monthly expenses and your spending. Now your financial blueprint is taking shape and you are seeing more money in your bank account before your next payday.
Creating your blueprint doesn't have to be stressful
1. You assessed your situation on how you manage your family's finances.
2. You came up with an answer of if it needs a makeover or not.
3. You understood your blueprint of what needs to happen to be on a good track.
All these things do not have to be stressful. How do you eat bread? Yep, one bite at a time. Just keep that mindset. You do not need to overwhelm yourself with how to manage your family's finances. You just need to understand it!
Hopefully, these guidelines gave you some good tools in your tool belt to get a good solid plan to manage your finances.
Andy is a blogger at Penny Less Dad and a financial writer associated with the Oak View Law Group. He is a debt expert and a member of several online forums where he shares his advice as well as tips to lead a financially independent life.