It doesn’t matter if you make seven figures a year or only seven dollars an hour; anyone can find themselves strapped for cash and living paycheck to paycheck. Fortunately, you can help your family recover from this disappointing circumstance. If you are ready to take control of your finances and put your family back on the right track, here are the steps you need to take.
Put it on Paper
If you had money invested with a financial planner and went to pay them a visit, you would expect to see spreadsheets and a written record of what was happening with your money. You should expect no less from yourself when it comes to the household budget. Put the, track the expenses and take control of your spending. It’s your job as a financial manager to know exactly where the money is coming from and where it is going. Any family member with a question should be able to review your spreadsheets and find the answer.
Everyone is Responsible
Spending money is a joint effort, and so managing it must also be a joint effort. You cannot expect to control the finances and keep the family on track if your spouse isn’t on board with the spending rules and the children continue waiting until the last minute to tell you about money they need for school.
Teach your kids to predict what funds they will need and to keep you informed when money is going to be due. As adults, you should predict what your expenses will be for the car, yard, and house maintenance every year. The family should work together to decide where to go for vacations and what kind of entertainment you will enjoy. You may be the manager, but the family must work as a team.
Monitor and Control the Expenses
It’s important to understand that there are two kinds of expenses. The fixed expenses are the ones that never change. These include your mortgage, loan payments, and insurance. Variable expenses include your utilities, groceries, and discretionary spending. Look at lowering some fixed expenses by shopping around. Talk to credit card companies about lowering interest rates. Teach the kids how to turn lights off to save money on the utilities. Finally, review your discretionary spending to spot areas where you can cut back and reduce expenses.
Savings is Vital
Small amounts can make a difference. Setting aside money every month will help carry you through when the kids have school fees, when you need new brakes on the car, or when the electric bill is unexpectedly high. An emergency fund isn’t a luxury. It’s a necessity that will allow you to keep your finances under control. Your emergency fund can never be too large, so continue putting aside money every payday.
Be Smart About Credit
You have to borrow money to buy a new car, but you don’t have to charge a dinner out. Be smart about your credit usage. Try to switch to a cash and carry policy. If you don’t have the cash, then don’t buy it. Save your money and make the purchase later. If your current car is running fine, then stick with it a few more months and put that money towards your debt. It’s a little sacrifice now that will have a large reward later.
Taking control of your family’s finances won’t happen by accident. It is a conscious decision. Getting the entire family involved will make a huge difference in how effectively your plan works. People will fall off the wagon occasionally, so you will also need to encourage each other to stand by the plan and keep moving forward. Before you know it, your finances will start coming into line and you will be the hero of your family.
Elisa Bosley writes financial advice on behalf of Accountant.org, a website where you can find a large directory of accounting services and resources in your area.