Family finances can be a difficult area to navigate. Depending on your income, your partner’s income, the number of kids you have, and many other factors, family finances might present challenges that you’re unsure how to manage. While there’s no magic bullet or simple trick that you can use to ensure that your family finances go well, there are some basic tools, tips, and guidelines that make managing your family’s money much easier. Check out our list of finances tips and see which ones you can use to guide your family toward a more stable, secure, and healthy financial future.
Build a collaborative budget
Budgeting is one of the most important in the list of finances tips that anyone can have, and it’s even more important when you’ve got a whole family to worry about financially. If you don’t have a budget, you might wind up at the end of each month scratching your head, wondering where all your money went.
If it’s your first time budgeting, you might be intimidated, but this is all you need to know to start:
- First, start collecting receipts and credit card and bank statements to give you a bird’s-eye view of all your spending.
- Next, categorize your different expenses under easily-understandable labels, like “Food & Groceries” or “Transportation” or “Childcare.”
- See how much you spend in each category, then use that amount to make a plan for how much you’ll spend on those items regularly.
You can also use your budget to give you insight into where you can better cut costs – more on that further down. First, we’ll mention something more difficult.
Prepare for difficult times
Life is full of ups and downs, and for many people, a serious accident, injury, or property damage might be all it takes to put them in financially dangerous water. That’s why preparing for financial hardship is an essential part of family finances.
Here’s what you should have to protect against tough times:
- Medical insurance: This should include doctors, dentists, and eye-care professionals that can work with your whole family.
- Life insurance: If the worst happens, you want to be sure that your family will be taken care of. If you don’t know much about it, you can learn more with this guide to life insurance.
- Emergency savings: Always have about 3 to 6 months’ worth of cash ready in case you get laid off, incur medical debt, or run into another unforeseen expense.
Start teaching the kids early
In most families, the parents are the ones who handle most of the finances. However, that doesn’t mean your kids should be totally out of the loop. After all, someday, they will need to be able to financially operate on their own.
Start teaching kids about money early with classic tools like making a lemonade stand, or by offering them an allowance. Once they have a little of their own pocket money, teach them about wise spending habits, saving habits, and the value of using money wisely.
Trust us, when your kids are gainfully employed and have enough money saved up to make a down payment on a house by the time they are adults, they will be thankful.
Find ways to cut costs
Part of managing money wisely is knowing where you can spend a little less without sacrificing too much. This can mean getting the cheaper paper towels at the grocery store, eating at home rather than going out, or deciding to pass up the top-of-the-line new car.
By sticking to a strict budget, you can examine your lifestyle and find areas of opportunity where a little less spending might offer you a little more financial security. Sure, if you stop buying coffee in the morning you won’t save that much, but that combined with other simple changes can help you start seeing a difference. You should also pay attention to your household bills. For example, if you feel like you’re spending way too much money on your electricity bill, you could think about going solar. Before making the switch, it’s in your best interest to calculate your solar savings to get an idea of how much solar panels could help you. Your solar potential and savings depend on your roof type, your current electricity bill, and actual offers in your area.
Look for ways to expand your income
Lastly, another great way to put your family ahead financially is to look for ways to build your income. Having a family can often mean putting your career on the back burner. However, by finding that balance between work life and home life, you can try to advance your career – and your earnings – while still giving your family the love they deserve. You can read more about work-life balance here.
Family finances are tricky, but by sitting down and focusing on a list of finances tips with effective solutions, you will start to see a difference.