How to Manage Your Family Finances
It’s your wish to have a wealthy family and children who won’t ever have to worry about finances, but do wishes always come true?
Understanding how to manage your family finances is important for your present reality and the future of your children. So, it matters that you get it right.
Here are six ways to help you manage your family finances effectively:
- Have Honest and Transparent Conversations
This is the beginning.
You can’t make long-term plans for your family’s future if you or your spouse decides to keep secrets. Secrets about how much you earn, financial gifts you receive, or your spending habits.
Before you consider making big moves with your family, build a foundation of honesty.
Being honest and transparent means that the family comes first before personal agendas.
Some tips for having conversations:
- Set a formal meeting time to discuss finances bi-weekly or monthly.
- Decide on a structure for the flow of conversations.
- Stay on course by asking relevant questions.
- Find a third party for accountability if needed.
2. Set a Monthly Family Budget.
Having a family budget is important. It helps direct your spending to only relevant expenses in the family at every time.
The 50–30–20 budgeting rule is the most common and effective way to budget. It states that 50% of your income should go to your needs. 30% should go to wants. 20% should go towards the future (saving, investment, or debt payment).
Once the budget is set, ensure to keep track of it monthly. Either manually or with budget tracking templates online.
3. Spend Less Than You Earn.
You shouldn’t eat what you should be planting.
When people have a big break and start earning more, everything changes. They immediately switch up their lifestyle — move to a new house, shop in more expensive places, and buy more things. It’ll only be a matter of time before it gets difficult to maintain.
A big raise or bonus is not a cue to switch up your or your family’s lifestyle if it requires you to spend it all at once. Always spend less than you earn. Live below your current means (and lower if it’s convenient).
If you or your spouse start earning more, it’s better to maintain the same expense bracket or a little more. Only a little. Do this while investing or saving for the upgraded life you want.
4. Focus on Paying off Debt
The 20 percent of your family’s income should go to savings, investments, or debt repayment.
But if you have a large amount of debt, the 20% (or a greater part of it) should go to paying off your debt.
This will give more room for your family to build more wealth financially in the future.
5. Start Investing for Your Children Ahead
If you’re yet to have kids, don’t wait till they arrive before you start thinking about their future. Also, if you have toddlers or teens, it’s only a matter of time before you drop them off at university. So, start now too.
This step will be easier once you’ve implemented the first three above. Having a budget to stick to and no more debt will make it easy to include investing for your children.
You can invest for your child on Houseriver. This app helps parents invest for their children and empower them financially. Whether for an unborn child or a present child, you can start here.
If you want them to live in better financial conditions, you need to prepare, plan, and empower them for it.
6. Invest in Financial Education for Yourself and Your Children
Most times, all you need to take your family from one level to the next is new information.
More financial education can help you manage family finances better. Keep learning, search for more knowledge, and try it out if it costs nothing.
Do it for your kids too. Teach them young what they should know about money. The financial principles they see you apply today will shape their lives tomorrow.
The earlier they learn sustainable financial practices, the better.
Ready to start investing for your kids?
Open an account on Houseriver here and start investing for them in USD.
Start with the Fixed Invest or Flex Invest plans to save for your child’s future goals.
