Putting down roots and starting a family means you have to keep better track of your financial situation. Millennials are starting to settle down and creating families, but a whopping 41% of this generation isn’t saving enough to retire.

Your family savings is more than a retirement fund, though. You need to have enough money to stay afloat in case the worst happens. Follow these tips and you’ll be well on your way to proper financial responsibility.

Budgeting

The first thing I did when looking into saving my family money was start budgeting my expenses. I was never a master at balancing a checkbook and planning expenses, but it’s one of those things you have to do when you start a family.

To make it simple, follow the 50/30/20 rule. This rule states that 50% of your income goes toward expenses, 20% goes toward savings, and 30% goes toward “wants.” Once you have your budget and after-tax income in front of you, start making adjustments to your spending to follow this model.

Trim your monthly spending to only 50% of your income, and allocate the other 20% to savings. What you do with the other 30% is up to you, and you can always add to your long-term savings or start a slush fund. This is the simplest tip we can give you when it comes to setting your monthly expenses.

Multiple Accounts

Once you start a family, you need to open multiple bank accounts. It’s too difficult to keep all of your funds in one place, and even two or three is probably not enough. You need to plan your savings (more on this below), and to do that you need to split up your money.

Instead of two or three accounts, you should come close to five or six. Create a family savings account for the long-term and designate the other accounts as you see fit. This strategy will help you keep track of your money’s movement and will help you plan and budget your savings.

Plan Your Savings

Planning is the best advice you can give people on almost any topic. Want to become more productive throughout the day? Want to get a large task done with a tight deadline? Want to save enough money for the short and long term at the same time? The answer is always going to involve making a plan.

When it comes to money, planning and calculating your savings is paramount. You need to plan for retirement, have some money in case of emergency, and allow yourself some wiggle-room for unplanned expenses. All of this can seem daunting, but when you break the numbers down it’s not so complicated.

As we stated above, it’s better to keep these funds in separate accounts. It’s too difficult to designate money if you have it all in two or three, so split them up to avoid confusion.

Family Checking Account

The family checking account is where all of your money will start. Both you and your partner should deposit your paychecks directly into your account, then divvy them up across your various other accounts.

You will also pay your bills directly from this account. Use auto-pay where you can, and check the balance each pay-cycle. You should have an idea of what you owe for the month, so don’t keep too much extra in this account when you don’t need to. There’s no interest on a checking account, after all.

You could set up an auto-transfer for this account as well, but you need to know the specifics of your banking situation. You can’t afford for one of your bills to cause an overdraft and need to make sure you’re meeting your bank’s minimum balance requirement.

If you still have some money left when the month ends, pay off any debt you have or add it to your long or short-term savings.

Personal Checking

Keeping a family checking account is necessary, but it won’t cover all of your expenses. Any marriage or long-term partnership is about sharing responsibilities. Most of the time, one person will do most of the cooking while the other will handle the laundry. The person who does the cooking will need a food budget since they have a better idea of what items your family needs at the store.

Once you’ve budgeted your expenses for the month and paid your collective bills, split the rest of your expenses into you and your partner’s personal accounts. Sit down and make a list of what each of you spends money on, then divvy your allotted monthly expenses into your two accounts.

On top of practicality, keeping two checking accounts will allow you to spend money more freely. You can start your own slush fund with your individual savings, and buy something you’ve had your eyes on.

Retirement

Retirement is relatively simple to plan since most people have some form of retirement savings built into their jobs. Your employer should match your contributions to your retirement fund, meaning you can save around 10-15% of your income each month without giving up too much of your short-term savings.

Retirement funds are set-and-forget money. This should be your absolute last resort if you’re in dire need of money. Try not to touch it until you retire, since the less you have in there the longer you’ll have to work.

Emergency Fund

The emergency fund is one of the most important family savings funds you can have. You never know when the worst possible scenario will happen, and you need to have some money in the reserves in case it does.

People change jobs around ten to fifteen times over the course of their career. As a society, this statistic is a massive difference from years ago, where some people would have a handful of jobs their entire career. Much of this change has to do with the availability of choices, but a lot of people also unexpectedly lose their jobs.

The market isn’t stable enough for you to rely on your job lasting a decade or more. You could get laid off or fired at a moment’s notice, and you need your family to endure while you’re searching. That’s where an emergency fund comes into play.

To create an emergency fund, first, calculate how much it costs your family to survive each month. Cut out the unnecessary spending – as you won’t be splurging on your regular subscriptions when you’re out of work – and you’ll have the amount you need to save in the reserves.

If you can save half of your monthly necessities each month, you’ll have six months’ worth of funds by the end of the year. From there, you can add to it or leave it where it is. If you don’t have an emergency fund already, start making one today.

Short-Term Savings

Short-term savings is the easiest to plan for and the most rewarding by a wide margin. This is the savings you’ll use for vacations and bigger purchases in the near future.

Think of your short-term family savings like a slush fund for fun. Add a small, set amount to the account every time you get paid, then take some out once or twice a year for a special occasion. If you’re saving your vacation time, use your short-term savings on a resort in a tropical location.

Most of the time, the short-term savings will be left over from the other accounts. You can always add more money to it as it comes, but you don’t want to be short on one of your essential accounts.

Setting Goals

Once you’ve planned your savings, it’s time to set goals for the future. If you own a home, there is likely a long list of improvements you’d like to make. The same is true for a car or any other big purchases you have on the horizon – perhaps you want to save enough money to send your child to college. Write these down and figure out how much you’ll need to save to make these goals a reality.

Don’t forget to include retirement and emergencies in this plan. Nothing ever goes according to how you envisioned it, so never leave your emergency fund short.

Adjust Your Goals

Once you have a list of goals, the realistic cost, and how much you’ll need to save, you’re probably facing a harsh reality: you won’t have enough money. People tend to overestimate how much they can save, especially if they haven’t done the numbers.

Now, it’s time to adjust your goals to make them realistic. You might not be able to afford a kitchen remodeling in the next five years. Sit down with your partner and prioritize the most important projects first. From there, you’ll have a more realistic plan you can work towards as you save more money.

Getting Your Finances in Order

These tips offer a solid foundation for financial security, but they aren’t the end of the road. It’s a delicate balance to save money while keeping your desires and long-term goals in mind. While saving more is always fantastic in theory, it’s not always ideal in practice.

If you have a family, you’ll doubtlessly run into some unplanned expenses. It’s up to you to adapt and create a financial plan that will get you through tough times. At the same time, don’t limit your enjoyment while trying to save as much money as possible. What’s the point in earning money if you’re never going to spend it on something you like?

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