Top Tips for Managing Your Family Finances

It’s claimed that money causes more problems in families and between partners than pretty much anything else. If you’ve ever experienced the worry and stress of living through financial difficulties, you’ll know what a serious effect it can have on your relationship and your family’s wellbeing. If you haven’t, then congratulations! However, it doesn’t mean you won’t face your own financial challenges in the future. Therefore, it’s sensible for every couple to take charge of their finances and ensure the security of their family for the future.

Money management starts with having a sound, accurate budget that you refer to regularly. If you don’t have one in place, it only takes a couple of hours to set up and will prove invaluable in keeping your spending under control. You’ll find many different budget planner templates freely available on the internet, or you can simply use your own spreadsheet to keep track. The basic requirements of your budget are to enter all your monthly outgoings, all your monthly income, and thus have a balance figure at the end of each month. Income is easy enough to add in, as for most people it will be their net monthly salary. You should also include any other income from sources such as benefits or investments to arrive at your total per month. Then you need to calculate what you spend your money on, starting with fixed costs like utilities, loans, mortgages, phone, and internet, etc. and then calculating a reasonable allowance for less predictable costs such as groceries and fuel. If you need some help working out what to include and at what rate, there are helpful guides available that list the kind of expenses you should be including and giving an average figure for typical families.

Using your budget
Once you’ve created your budget, you’ll have a much clearer idea of where your money is going each month. That means you can look at where you might be spending more than you want or need to, and make some economies. You should try and include a regular amount for savings, and if possible, a separate contingency fund to cover unexpected expenses. You also want to have an amount put aside each month to cover treats, days out, or any non-essential purchases that you wish to make. The amount you allocate will depend on how much disposable income you have available, but even if that’s very little, it’s a good idea to have a budget for spending money. You’ll find it almost impossible, and quite depressing, to be unable to spend at least a few dollars on yourself throughout the month, so don’t think of it as an indulgence, but a necessity. You should refer to your budget regularly, and update it to make sure it is accurate and you are sticking to the plan.
Savings and investments
Having a savings account is always a sensible policy, but interest rates have been very low for some time now, so low-risk investments are also a viable option. Be careful with investments and avoid the get rich quick schemes that promise overnight wealth, as these are bound to be either a scam or too high risk. Using your savings to add to your capital by investing is a perfectly reasonable course of action, but only if you are not putting your initial investment at undue risk.
Why you should consider insurance
It can sometimes feel as though you are throwing money down the drain paying for insurance because if you never have to claim, the money you’ve spent is gone and irretrievable. However, the point of insurance is to ensure you have the means to cover large expenses that could prove devastating to your financial situation if you can’t cover them. House insurance is a good example. If your house is insured and it goes up in flames, your insurance should cover repair or rebuilding, the value of your belongings, and accommodation during the rebuild. If you had to find that money yourself, it could run into hundreds of thousands of dollars, which is not going to be easy to find! Life insurance is slightly different, as you will get a return on your investment. It’s a great way of securing your family’s financial future should anything happen to you, and avoiding the additional stress of potentially losing the family home. You can now buy life insurance online, using expert brokers who can advise you on the most suitable policy.

The importance of making a will
It’s not a very pleasant thought, having to plan for what will happen after you’ve gone. However, it’s the only way you’ll be able to ensure that your assets go to the right people. Do it yourself wills may be cheap, but wouldn’t have the same weight as a will drawn up by an attorney, so it’s worth spending a bit more and having the reassurance of knowing your wishes will be honored. A qualified attorney will also be able to advise on the best way of wording your bequests so that there is clarity regarding your exact wishes.

Teaching your kids how to manage money
Teaching your kids the ins and outs of creating a budget and handling their money is a valuable gift that will serve them well as they grow up. Many kids have little understanding of finances and monetary responsibilities, and frequently encounter problems when they leave home as they have no experience in managing their money. It’s never too early to start with your kids, teaching them the value of coins and notes and showing them how long they would need to work to pay for a new toy or another treat. The more understanding they have of money management, the better they will be able to cope when they leave home.

Even if you have a low income, you can manage your money far more efficiently using a detailed personal budget. It will give you insight into your spending and where you can make savings, and you will have control of your family finances, making it more likely that you’ll be able to save for the future.

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