Figuring out how to best manage your family finance issues can be a challenge, especially when you’re newly married or have just had your first child. It isn’t uncommon to, at least at times, feel like things are out of control, or at least not as good as you’d like. Luckily, there are things anyone can do to keep their family finances in order.
How to Best Manage Your Money
When you have a family, you need to manage your money based on key priorities. Usually, this involves paying your bills, handling household expenses, and trying to put some money in savings.
While exactly what you spend and save may differ depending on your unique circumstances, certain tips are practically universal. By following those below, you can figure out how to best manage your money so you can keep your family finances on track.
Start with a Realistic Budget
A budget is the foundation positive financial change. It outlines how much money you have and where it needs to go, creating a functional framework for your finances.
While tracking your money isn’t fun, it’s the best way to keep control of your situation. List all of your debts and household expenses along with your savings goals. Then, when your paycheck arrives, follow your budget like a set of mandatory instructions, ensuring every dime lands in the proper place.
If you don’t at least have an emergency fund, make sure some savings is part of your budget. An emergency fund can help you avoid a financial catastrophe should the unexpected occur, like an emergency car repair or large medical bill.
When it comes to maintaining your household’s finances, automation can be your friend. By setting up automatic savings transfers and bill payments, you decrease the odds that you’ll forget or, worse, spend the money on the wrong things.
Try to align your bill payments with the days your checks hit your bank account. That way, the money comes out quickly, reducing the chances that you’ll spend it by mistake. Alternatively, you can set a transfer to a secondary checking account that reflects your spending money. Then, by only using that account for groceries, gas, and other costs, you won’t accidentally overspend.
Pay Off Debt
Debt is usually a big weight on any family’s shoulders. It represents a long-term financial obligation that can quickly get out of control. Plus, since you are paying interest, it costs you by merely existing.
Once you have your budget in place, consider if there is any discretionary money that would help you pay down your debts. If so, send it as an extra payment on the debt with the highest interest rate, letting you get the most bang for your buck.
Then, once that debt is gone, take the entire payment amount plus the extra you were sending and put it all down as an extra payment on your next highest interest rate debt. This allows you to accelerate your repayments, helping you get out of debt quicker.
After your debt is tackled, start thinking about the long-term. Do you want to buy a house? Save more for retirement? Fund a child’s education?
If you have additional goals, now is the time to start on them. As you increase your savings in these areas, you can craft a more secure financial future. Over time, this makes keeping your family finances in order easier, ensuring you always make the most of your money.
Do you have a tip for how to best manage your family finance issues? Tell us about it in the comments below.