Financial Management Tips for Families
Raising a family is one of the most rewarding milestones in your life. Be that as it may, you can reason that that’s because of how much of a change it would make in your life. Unfortunately, that includes your finances as well.
But that doesn’t mean you have to push yourself too hard just to survive. With the right plan and the right attitude, it should be possible for you to maintain your lifestyle.
Why This is Important
The lifestyle of a single person is often not easily translated into family life. From small habits such as impulse buying at the grocery store to an affinity with collecting valuables, the issue is the degree to which our expenses will change.
The PLUTUS Foundation, a non-profit organization promoting financial literacy, education, and empowerment, estimates that the average yearly cost of raising a child in the U.S. in a middle-income household is $12,980.
And that’s only for one child. It’s apparent then that we’ll have to get creative if we are to maintain the necessary expenses while also keeping up with some of our hobbies and interests.
10 Tips for Money Management for Families
With all that said, certain sacrifices will be necessary in order to support a family. What we’ll be trying to do is to limit those sacrifices; think of it as making the process a little more efficient.
1. Perform a Self-Audit
Audits are oftentimes something that makes people a little bit nervous or stressed. This might be so, though this time you’ll be thanking your past self years into the future.
It’s basically how you’d audit a company. Keep every receipt you collect within a year and compare that to your yearly income. It’ll take some elbow grease going through all that but some clever planning should give you an advantage.
Try formatting a spreadsheet where you can input all the expenses you incur, including things like Netflix or Spotify. Here, you’ll need to be disciplined to keep things updated.
2. Analyze Your Debts
There is no shame in having debts. Most people these days have one in some form or another. The key is to not fall into the trap of getting used to them.
What we mean here is that you should address these debts as soon as it’s possible. While that may be easier said than done, there are a few ways to be more efficient when addressing them. Foremost of these methods is giving them an order of priority.
Prioritize them by order of interest and the amount borrowed. This should give you a clearer picture of which one is more likely to cause you more financial stress over time.
3. Establish Financial Goals
The key to this tip is to make these achievable and tangible goals. This way, you are guaranteed a level of satisfaction each time you are able to accomplish an achievable goal.
The reason why this is important is that for each accomplished goal, you are able to increase the level of difficulty for the next one. By doing this you are able to improve your financial standing at a much more sustainable level.
That is often why people give up on their financial goals. Oftentimes, they are either too ambitious or too vague about what they want to do. Addressing these at the beginning will allow you to skip all that.
4. Establish a Budget
This is another tip that will require a lot of discipline on your part, at least if you want to be efficient about things. Planning and sticking to a budget is a lot more important than people give it credit for.
“But everyone knows about budgeting!”, you might say. While that may be true, what we are trying to emphasize is the importance of sticking to a well-planned and realistic budget.
Another reason is that the way we see budgeting as a single person won’t apply to family life either. The best way to do this is to sit down with your significant other and go through any future expenses in detail.
A clever way to do this would be to use digital wallets. This way, you are able to transfer a specific amount of money per grocery trip or whatnot to keep you within your budget.
5. Organize Your Grocery List
Similarly, planning each grocery trip in detail will shock you with how effective this is in terms of sticking to a budget. That’s due to the fact that you specify just what and how much of each item you should be getting per trip.
Sticking to that list will then make sure you stick within the budget, sometimes even lower if you’ve already accounted for all those impulse buys. That’s one way to make yourself feel like you’ve accomplished a goal.
It would have a small impact per trip, as you start practicing this but over time it will save you hundreds if not thousands of dollars in groceries. Hey, a bonus might be losing some weight in the process.
6. Deduct What You Can from Your Taxes
One other thing that people dread is tax season. After all, who doesn’t get upset after the taxman takes a big portion of their income?
What people often forget is the idea of tax deductibles. These are expenses that you’ve incurred that may be deducted from the total amount of your taxable income. Each state will have its own way of addressing this in specific situations.
Another thing to keep in mind is that you have the option to either take a standard deduction or to itemize their deductions.
7. Read Before You Buy
Sometimes, we make purchases in such a hurry that we end up skipping on special promotional deals or discounts. By making sure we read up on the store’s policies, we can ensure that we aren’t spending more than we have to.
An example is the use of cashless payments. Some stores provide discounts for card transactions based on what their deal with the card processor is.
You might not remember to do this each time but building the habit earlier on will help you in the future. After all, you might find that you can spend more on your hobbies with all the discounts you find.
8. Utilize Technology Efficiently
Similar to the previous tip, understanding what’s available for your use technology-wise might give you a boost when it comes to your financial habits.
One example is the service PayPal, which is accepted in most stores internationally. With how widespread the service is, you might be able to find better deals on online transactions. That, and it’s a lot more convenient.
Other examples are mobile apps that help you keep track of your spending and earning averages. This is done by making entries of each time you either spend or earn money. The app then gives you easy-to-understand graphs and summaries for your perusal.
While it’s best to make do with what we have, a lot of these technologies are free. What’s to say then that we’re wasting time with them? As long as they provide some benefit to your financial stability at little cost, it is an advantage worth considering.
9. Keep Things Simple on Special Occasions
While we said that we’ll be trying to minimize sacrifices, that doesn’t mean that we won’t bring them up. One of the sacrifices we try to emphasize is how much you spend on any special occasion.
Be it your birthday or anniversary, raising a family will entail having to slow down on celebrations. While we’re not saying you should skip them altogether, it is still worth considering making things a lot more affordable during these vents.
Instead of ordering some pasta, why not make some at home? You might even get to use the time to bond with the family. Be creative with how you can cut back those expenses and it might not even feel like a sacrifice.
10. Consider Second Hand Purchases
Another worthwhile sacrifice you should consider is not buying brand new all the time. Considering second hand items for your purchases will allow you to either save more or make the most out of what you spend.
In either case, we don’t see a loss. For example, instead of buying a brand new set of golf clubs, why not buy second hand? Golf is already expensive so cutting a few hundred dollars from your clubs will help you breathe a little better.
And it’s not just for your hobbies too. Some expenses, such as a home computer, will be much more achievable if you consider getting secondhand items. You may face some risk, but the payoff is well worth it.
The bottom line is that sacrifices do have to be made when raising a family. It’s unavoidable, and if you want to be able to provide a good future for your kids, it’s also necessary.
The trick is to make things more efficient and optimize each expense. With a well-thought-out plan, that should be easily achieved. If we missed anything, let us know in the comments below!