Money Management: Financial Tips For Your Family

Money management is extremely important when it comes to growing a family. With each life change, whether you are expecting your first child or just got a raise at work, you can expect your financial situation to shift. It is important to develop a plan to keep your finances on track throughout the different situations that life can bring. Talking with your spouse or building the plan together is also important to make sure that everyone understands what money management means to your family as a whole. 

Follow these tips to ensure that you and your family are maximizing your household income and prioritizing your money to the best of your ability: 

Create Your Plan Together
Even though money can be considered a serious topic, getting the whole family involved can boost financial knowledge among everyone in your household. Before taking money-related information to your children, communicate with your partner about your dual financial plan and how you can improve it. This will affect their spending and saving habits as well, so budgeting insights should always be shared with your partner to avoid confusion about how much you are able to spend in a specific period of time. As a couple, you may be working out of a joint bank account with an in-person bank or digital savings app, but along with using these to monitor your balance or receive updates, look into the other services they provide. Some are better for those with a lower credit score, or can help with unnecessary hidden costs. Conversing as a couple will not only ensure that you are both on the same page with what you’re using to budget your finances, but also creates a  second set of eyes that will make sure your numbers are correct. You can get the older kids involved in the process in order to teach them the importance of good money management too. 

Know Your Expenses and Income
Knowing your expenses and income as a family is the next step to better money management. When you are creating your budget or spending strategy it is important to understand that expenses can vary from month to month. It is recommended to budget to zero, this way you can anticipate any change in your expenses for the upcoming period. Budgeting to zero means that each dollar of your household income will be allocated to a cost like a monthly bill, entertainment or savings. There should not be any money that is left over or not included in a category. The best way to create your spending plan is to make sure that you stay organized. Using a tool like excel, an online budget builder or even a journal is highly recommended. Having a plan for your money is key to making sure that you are paying bills on time, while setting money aside for future expenses like your child’s education or first car. 

Pay Off Any Debts and Start Saving
Lastly, when it comes to building your family’s money management plan, creating a debt repayment strategy is important.  Each family carries some debt, whether it is a credit card, student loans or a mortgage. This is normal, however, it is important that you create a plan to pay off your debts in a timely manner. Carrying too much debt can affect your credit score and limit your mobility to make big purchases. Think of your credit score as your report card, the higher the number the better. Loan offices use this number to help determine interest rates on things like car loans and mortgages. Once you have determined your debt repayment plans, the next stage is to start saving. Since you have already allocated money to savings in your budget this is fairly simple. However, as you pay off your debts, it is important to reallocate the money that you were spending on those bills to other things. While it may seem tempting to start spending that on entertainment purchases, it’s equally important to start saving more. As your family grows, more costs down the line can accumulate. Whether it’s sending your kids off to college, helping them buy their first car or just you’re thinking of buying a bigger home. It is important to have a good sum of money set aside in a savings account.  

These are just a few tips to get you and your family on track to better money management. Knowing how to prepare for your future, while living comfortably is important. Creating your money management plan as a family can be a great way to teach responsibility and make sure everyone understands just how important finances are.