In the Same Boat: 8 Essential Principles of Managing Your Family's Finances

Managing your family’s finances can be as tough as you can imagine, but it’s an integral part of taking care of your loved ones nonetheless. As much as you’d like to give them everything in the world, sometimes, compromising is necessary. After all, you don’t want to deplete every last resource in your bank account and fall into debt. With that in mind, let’s take a look at what you can do to manage your family’s finances without having to compromise the quality of your life in a significant manner:



1. Make more money

Well, it’s either save money or make more money when looking for ways to make ends meet, right? If your time allows it, why not sacrifice a couple of hours per week and take up a job on the side? That way, you’ll have the necessary funds to cover some extra costs that come your way. In the modern economy of today, you can also earn money through the internet by doing paid gigs or any kind of freelance work you’re comfortable with doing. As long as you have decent skills to show, you have the freedom to work as little or as much as you want.

2. Use shopping lists

The use of shopping lists makes it less likely that you’re going to fall for making an impulse purchase, simply because it’s a form of a plan that you stick to no matter what. Moreover, a shopping list allows you to plan out your shopping in advance, so you can give it enough thought and not end up buying things that aren’t absolutely essential. There’s a difference between wants and needs; that’s not to say that one are better than the other, just that both serve a completely different purpose in your life, so making a distinction between them helps a lot.

3. Consider your short-term and long-term expenses

Too many people make the mistake of only taking their short-term costs in the overall equation. This may work out for months, sometimes even for years, but what will happen once some unexpected costs hit you out of the blue? Home renovation costs are just one such example that comes to mind. Or maybe your car could break down at any moment. The right way to handle this is to plan for such events in advance and set aside a little bit of money each month. Put it in a separate bank account if you have to, but the most important part is that you remain disciplined and faithful to the principle.

4. Track your spending habits

Saving money is unrealistic if you don’t have a clear idea about how much you spend each month in the first place. This includes groceries, utilities, etc. The main reason for doing this is to identify spots where you could possibly spend a little bit less without sacrificing too much quality of your life in exchange. The more of these you manage to identify, the better. The difference you make can be used for putting a little bit of something on the side each day or even investing in stocks, real estate, or other profitable avenues.

5. Be focused when paying the bills

Ideally, you should pick a day of the month you’re willing to dedicate to paying the bills. The date that you pick is not as important as making it a habit and sticking to it. In case an unexpected bill hits you that needs to be paid, making an exception is all fine and well. If you’ve followed all of the other tips, you should have a hefty chunk of change set aside for emergencies at this point. If you haven’t had enough time to accumulate the savings, taking a loan you can repay later on is a suitable option you can take advantage of. As long you make sure to study various reviews of different loans beforehand to ensure you’re getting the best deal and you have enough monthly income to repay it, it’s only a matter of time before you can resume your life as it used to be.

6. Give your kids an allowance

Not only will this teach them to better manage their money when they grow up, but it’s also a way to get rid of the guilt associated with spending. In essence, an allowance is money your kids can spend in any way they like. They won’t have the feeling that someone is tying them down, while at the same time, the money they will be getting each week or month is finite, and thus, an amount that is controllable by their parents (you).

7. Set priorities

If everyone is on board with selling your family car and using public transport, for example, this is another way to cut down your expenses. In the end, it all comes down to how important something is to you and how much it adds to (or subtracts from) the quality of your life. If you live in the city where public transport is readily available, perhaps selling your car won’t really make a difference. If you live in the countryside, however, this may not be an option.

8. Pay with cash only

This is more of a psychological trick than anything else, but if it helps, it’s worth a shot. Here’s how it works; if you make it a habit to only pay with cash, you know exactly how much you have left at any given time, whereas paying with a credit card could get you trapped in an illusion that you have more than you think. Try to motivate your entire family to do things this way and see if there are any improvements that lead to more thoughtful spending.

Conclusion

These essential principles should make a noticeable change in your spending and money management habits. Granted, some of these take months if not years to fully implement and get used to, but as you’re probably well aware, financial matters cannot really be resolved overnight. In conclusion, the most important lesson is to learn discipline and self-control – all the rest should fall into place naturally.

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