It's not uncommon to feel like there's a little too much month left at the end of your money. Piano lessons, the math tutor, the mortgage -- it just keeps adding up. Do you book the family vacation
and worry about how to pay for it later? Or do you just worry? With targeted savings plans, you can take control of your money and determine how it can best serve your family's needs
create a family financial plan
Before you start creating new savings accounts, it's a good idea to create a family financial plan and figure out what you're saving for. "Start by communicating," says money coach Patti Handy. "Depending upon the age, kids should be involved in the family finances. I don't suggest parents whip out their 401K statements, but
credit cards, expenses, and savings goals need to be on the table," she says.
Set up a family finance meeting
So how exactly can you start the conversation? Call a family meeting to talk about finances. "Kids need to understand the monthly cash-flow -- how much it takes to run the household," says Rosanna
M O'Neill, Second Vice President,Wealth Management, and Financial Advisor at Smith Barney. They also need to understand priorities. "Parents have to chose between car repairs and new shoes. One is
a need and one is want," she says.
Go through your monthly expenses and show the kids what's left over after all the needs are paid for -- even kids as young as five years old can be a part of these discussions, says Debbie
Gianelli, Certified Financial Planner Principal, Whole Family Financial Services. "If sharing specific numbers is uncomfortable, explain income for example in a dollar range. But it is important
for older kids to understand how money works in the real world. If they develop champagne tastes at an early age, they will need to have careers that can support their tastes," she says.
get kids involved in savings goals
Once you know how much money you have to work with, let let everyone suggest savings goals your family can work towards, whether it's a new car, a ski vacation, a flat-screen television, or a
weekly dinner out. Write down everyone's suggestions, talk about them, and then vote on each one.
Start with at least one goal that everyone is excited about -- and that you can reach in a few weeks -- membership at a museum, a special meal out, or something else that costs under $300. You can
have other, longer-term goals as well, but make sure something on your list will produce tangible results in under three months. "Children will learn the difference between immediate wants and
spending vs. longer term goals and saving. Having goals that children buy into helps them think longer term and helps them understand the concept of foregoing short term wants for bigger goals,"
Next page: How allowances fit into the family budget