Tips On Family Financial Management

Try these 4 tips to better manage your family financials

Financial management within the family is a hard nut to crack for many of the home-runners. Many people never consider or foresee the possible future expenses and drain out all the savings and resources for present day life. As a result, several families find they run out of financial resources and become helpless at emergency situations. Proper financial management within the family is essential to be well supplied with financial resources when in need. The following are some tips to maintain a healthy family financial position.

Always maintain a budget

Budget is the best possible form of scaling the income, expenditure and also a way of planning for future emergencies. The budget should include all the possible expenditure of a month. There will be many spending in every family like food, clothing, travel and fuel expenses, maintenance expenditure, loans or other payments, children's education, savings etc. 

To start budgeting, make a list of all the expenditures. Once the list is made, then the income can be divided according to the priorities. Start dividing the income from the most inevitable expenditure and always try to keep some amount balance as saving. If the income is insufficient, then avoid the less important expenses. This way a budget can help in the planning of the family financial health

“when people take loans for buying consumer items like electronic goods, home furniture etc., it is called consumer debt.”

Consumer debt is always detrimental

Carrying too much consumer debt is never acceptable in proper financial management. Consumer debt means the debt undergone for purchasing consumer products. For example, when people take loans for buying consumer items like electronic goods, home furniture etc., it is called consumer debt. The concept of consumer debt has reached new realms with the introduction of credit cards. When you purchase using credit cards, make sure that your budget can afford the payment in the same month itself. Do not carry the consumer debts to the next month if you wish to balance the budget.

No financial secrets among the earners

Many couples commit the mistake of keeping financial secrets from each other. Before preparing the monthly budget, share how much you need for meeting the personal needs like purchase and paying off personal debts etc. Keeping financial secrets will imbalance the budget and personal requirements. When spending in the family, all the earners should be made aware of the expenditures. This will help them understanding the financial state of the family and strain a bit to save an extra penny or earn an extra buck if needed.

Savings are essential for family

A financially healthy family should reserve a percentage of income as saving to meet unexpected and emergency needs. Medical expenses, car breakdown etc. are very common unexpected needs when people have to extend the budget. If the family reserves money as saving, then unnecessary debts can be avoided. The savings are also necessary to meet the expenses in old age when you are not able to work and earn. If you expect a possible expense in the month, then there should be enough reserve to meet that situation too.

I hope the above tips can help you maintain a healthy family financial position.

References:

https://investopedia.com/terms/c/consumer-debt.asp

Article Written By: Nazmi (Approval Code: CC-MH-340-2020)