Let’s Get the Family Involved!
Money management is essentially all about tracking your daily expenses, handling bills, and saving for the future. It helps you be more in control of your money and gives you a clearer picture of where you stand financially.
When it comes to managing money for the family, things can get a lot more complicated. Dividing your paychecks into sections for the children’s school, utility bills, and college funds seems impossible without proper planning. In fact, according to the Department of Agriculture, the cost of raising a child has become almost $233,610. That is a lot of zeros!
At first glance, you must be getting cold feet. But don’t worry, that’s what money management is for and it’s never too late to start!
6 Easy Tips to Manage Your Household Budget
It’s important to remember that no one is born with money management skills; you have to learn and properly study the art of it to truly master it. Here are some tips to help you start with money management.
1. Set SMART Goals
Smart goals are Specific, Manageable, Achievable, Realistic, and Timely. This is the very first step that would give you a better idea of where you stand, financially. If you are not the only working member of the family, then you each need to set your roles and responsibilities of the house.
2. Identify Income and Expenses
After setting your objectives, look into where your money comes from and where it goes you can do this by recording your family’s monthly or weekly expenses.
3. Differentiate Between Needs and Wants
You should set a line between what you can afford and what you can afford to postpone. By properly understanding your household expenses, you can clearly identify and separate your wants and needs.
4. Design A Budget
Designing a budget can be intimidating. The first step is to make sure your expenses are not exceeding your income. Your budget should include your expenses (including seasonal expenses), the money you set aside for investments and other assets, and, most importantly, emergency funds. Emergency savings are for the worst-case scenario and they protect you from any unforeseen contingencies.
Also, when it comes to debt repayments, make sure you prioritize them above anything else. This is because you end up draining your wallets with the interest payments.
4. Set A Clear Execution Strategy
Now, let’s get to the tricky part. Allocating your money. You need to make optimal use of your resources. Remember, money management isn’t about how much you earn, it’s about what you do with what you’ve got.
5. Looking Forward
All plans require monitoring, reviewing, and occasional revaluating. Circumstances can change and even the slightest abruption can cause huge changes to your strategy. Life happens, give yourself room to wiggle so you aren’t left completely stranded once something doesn’t go according to plan.
A careful and well-defined plan can help you save a lot more money and time than you can possibly imagine. Furthermore, money management reduces the stress and anxiety that comes with financial losses.
You can finally forget the endless sleepless nights of worry about whether or not your children will be able to go to college. Start with these 6 money management tips right away and your children can go to college and have a vacation once a year too! As mentioned before, your current paycheck amount makes no difference if you spend and save wisely today.