Improving your family finance situation is something that everyone should manage properly. Spending time each month to take a deeper dive into your financial health is a great way to improve your financial situation.
If you are unsure of where to begin, follow these 5 simple steps to improve your family finance management.
Family Finance Tip #1 : Set Financial Goals
In order to improve your financial situation, start the process off by setting a variety of attainable financial goals. Start by setting short term goals, then eventually following up with a long term goal plan.
Create SMART goals. These goals are attainable with a realistic time frame and measurable steps. If you are unsure of what goals to set, start with debt repayment or saving a certain amount of money each month.
When you’re setting your goals, this is a great time to include your family members, as some of your goals may include some help from other members of your family.
Family Finance Tip #2 : Create a Spending Plan
After setting your financial goals, create a spending strategy to make sure that you can hit your finance goals.
Creating a spending plan is very similar to creating a budget. First, cover all of your monthly expenses.
To create a solid spending plan, determine both your total monthly expenses and your household’s monthly income. Next, your other financial priorities. This way you know how much money you need to spend, how much money you bring in. Use it to calculate what you will have left over at the end of the month.
Part of your spending plan should include listing out what expenses are necessary for your family each month. Consider which ones could be cut out in order to help meet your financial goals. Think of the list as what is a “must have” and what is a “nice to have.”
FAMILY FINANCE TIP #3 : Eliminate Unnecessary Expenses
After laying out all of your household income and expenses, it’s beneficial to evaluate which extra expenses you can cut out of your monthly budget. One of the easiest ways to improve your family finance standing is to reduce added expenses.
Getting rid of subscriptions that you don’t use will help you allocate more money to your necessary expenses. When I went through my account from last year, I found about $50/mo worth of subscriptions that I forgot about.
FAMILY FINANCE TIP #4 : Start Saving
Along with cutting out added expenses and creating a spending plan, it is equally important to create a savings account. Luckily, saving money can be fairly simple especially if you have a portion of your paycheck directly deposited into an account. This way you are able to automatically add into your savings.
The rule of thumb if you can afford it is “pay yourself first.” Meaning do all you can to save even a small amount each month toward your future.
While having money directly deposited into your account is a great plan for some, others may prefer to follow the 50/30/20 rule. Dedicate 50% of your income to your needs like important monthly bills, groceries, etc. Include this money in your spending plan. Dedicate 30% of your income to your wants, or non-essential purchases each month. Finally, set aside 20% of your income into your savings each month.
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Having a savings account is important for those unexpected moments that life tends to throw at us. As for a general rule of thumb, you should have enough money in your savings account to cover the cost of your bills for three months.
FAMILY FINANCE TIP #5 Shop Smart
In order to change your financial standings for the better, it’s important to shop smart. This starts with your bank account, and making sure that you pick a financial institution that fits your families needs. Many financial institutions charge you for things such as overdraft and monthly maintenance, so it’s important to find an option that has zero hidden fees. This way you can get the most out of your income!
Another aspect of shopping smart is to plan out your grocery shopping and trips to purchase other necessities. Once you’ve planned out your trip, save even more money and find coupons that may help limit the cost of the products you need. Remember, you don’t need to clip every coupon you see but rather the ones you need. Couponing has been made easy with mobile apps that help you search and store the coupons you want!
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Improving your family’s finances doesn’t have to be a daunting task. With these simple steps, you can improve your financial health in no time!