Building a DYI Household Finance & Investing Program

brianoconnell

Americans have it hard enough trying to stay financially afloat during the pandemic without sweating out a do-it-yourself investment strategy – one that ties in household budgeting and savings into the mix.

But merging saving and investing into one consolidated household finance strategy is a good idea – and it starts with a good household budget.

“The family budget is the foundational component to any money matter as it
pertains to any family or business,” says Frederick Towles, president of The Towles Group, a money management firm based in New York, N.Y. “It all starts there.”

According to Towles, a good budget plan must have a plan to save, invest and pay down household debt.

“This budget would obviously also include current month to month household, auto, and personal care expenses,” he says. “I recommend using the tax home dollar amount or net profit from business as the basis of the budget and build it out from there.”

While the budget needs to be paramount in a do-it-yourself household financial plan, other money moves now need to be a priority. “After creating a good budget, I would place savings and investing on equal ground with debt management - as saving in this economy without investing is almost a waste of money due to inflation,” Towles says.

Aim for a long-term financial plan - 5-10 years is a good range. “From there you can break it down annually, then quarterly, then monthly,” Towles says. “You want to be able to measure progress against something. Just pointing things in the right direction isn't beneficial. This is why the long term financial plan broken down into smaller pieces is advisable.

Is there value of paying for a financial advisor to set up a household savings, budget, and investment plan or should you do so yourself?

“Sometimes a third party is needed to make sense of things,” Towles says. “Each family, if they are honest, knows if they need a third party to be involved. If you do so, then go hire a third party that will help you and not sell you financial products. There will be a fee, of course.”

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Once you’ve established a household financial plan and have brought aboard a trusted financial manager, go ahead and explore alternative investments bitcoin or gold.

“I’d leave room for alternative investments, especially those that can be purchased in small increments like gold or fractions like cryptocurrencies,” Towles says. “The severity of the household's debt would determine how much I'd recommend dabbling in alternative investments. But there would definitely be some dabbling.”

What's Towles’ best piece of advice for creating, implementing, and managing a full and holistic household money management plan that incorporates investing, savings and budgeting, and loans and debt management?

It’s actually quite simple – be realistic and consistent.

“Just work from a financial management model that you are comfortable with,” he says. “As always when it comes to money, keep in mind that a hybrid household financial plan is probably new to you, so some tough decisions will have to be made.”