Tips for Managing Your Family Finances – Family finances is actually a very large category. It may encompass anything from a young couple with no children to a sprawling multi-generational household and many arrangements in between, such as a single parent of young children who also has one of their own parents living in the home. When people talk about family finances, they are usually referring to a traditional nuclear household. However, while there is no one-size-fits-all approach to money management, there are several principles that can apply to just about any family arrangement.
Talk About Money
Many people, and many families, don’t like to talk about money. While it’s understandable that some people may be more naturally reticent than others, a refusal to discuss money can have several negative consequences. First, kids growing up in a family where nobody talks about it may not get the financial education that they need to make smart choices as adults. This does not mean you have to start investing money haphazardly and include your children it just means, get the conversation started.
Second, finances may become a point of contention between spouses, especially if they have very different assumptions about what money is for–spending or saving, for example–and don’t share those assumptions with one another. Third, it can lead to financial instability. If you can’t talk about money, you can’t talk about making a budget, retirement planning, how to pay down debt, estate planning or any of the other important things you need to discuss. If you are in a relationship with someone, setting aside some time to have some conversations about the topic is important. If you have kids, make it a normal family subject for discussing at the dinner table or anywhere else.
Make a Budget
Making a budget should be another priority, and like the money discussion, it’s important no matter what your family configuration is. This will help you ensure that you have enough money to make ends meet and will allow you to see what is left for discretionary spending. It can also allow you to save more and spend less on things you don’t particularly want to be spending money on.
Tracking your spending often reveals surprising information about where your cash is going and how you can change that. It can also be the first step in finding strategies to deal with various issues, such as how to save for your child’s education or how to pay down your own debts. You may also find that there are many creative ways to cut your monthly expenses. If you have student loans, you might be able to refinance them with a private lender. This can mean a lower monthly payment going forward.
Have Emergency Savings
The recommendation is generally that you should have three to six months of emergency savings, but you may want more depending on your circumstances. However, even a cushion of just a few hundred dollars can make a difference, giving you somewhere to turn besides credit card if you have an unexpected expense, such as a car repair or out-of-pocket medical expense. Focus on building this up steadily and it will help you avoid going into debt over necessities.
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