Few things can cause as much family discord as money matters, thus it is vital to use utmost care when managing money with those you call your own. Heed the following money management advice when working with family to smooth tensions and maximize your financial position.
Involve everyone
Money touches everyone in a family, from the patriarch to the smallest of children. Because of its importance to the family as a whole, it is important that everyone be involved in its management, even if only to understand and learn. Obviously not everyone will have the same weight as decision makers, yet the more everyone can understand, the better they will individually do with money.
To accomplish the goal of having the family involved, you may want to schedule regular money management meetings. These can be regularly such as once a month or vary based upon the needs of your family. Even those who cannot make a decision such as children should be allowed to speak. Remember that this will also be your opportunity to teach your children about managing money themselves.
Make sure that the family finances are well understood
It is amazing and also scary as to how many people have no idea of how much money they actually have. Ignorance breeds debt as people spend more than they have simply because they do not understand how much they have. A family unit may have income from a variety of sources, and these should be well understood. It is also important that more than one person understand the family finances so that if one person can no longer perform this duty, the family finances can remain intact.
Create a comprehensive and detailed budget
When dealing with a family, a budget is absolutely vital. Categorize expenses according to the level of necessity. For instance, food is obviously of vital importance, yet eating out is a luxury. It is imperative that the budget is realistic, for if the family does not stick to it, then its value will be compromised. Of course, unexpected expenses commonly pop up, and these should be considered as well. The family should have input into this budget and should also understand it.
The budget should not just delve into what the family should spend as a unit, but what every member in the family can spend. By giving individuals responsibility, you will lower your chances of multiple people spending too much and then blaming others. If someone spends too much on one item, then spending should be lowered on another item. Consider the budget a liquid document and adjust as needs change.
Use money saving techniques for the family
There are a wide variety of money saving techniques that families can utilize, and proper money management can identify these. For instance, with a larger family, you can purchase in bulk. You should use coupons and shop on sale. Purchase store brands. Save electricity by tuning off lights and buying energy-efficient appliances. Make sure that everyone in the family does their part to save.
Save for large expenses
Families often have large expenses, such as college and wedding costs. Families should save for these slowly so that they have enough when the time comes. It is also very important for them to consider potentially devastating unexpected costs such as those brought on by a loss of employment or a medical emergency.
Take advantage of tax advantages
The family may be eligible for various tax advantages. There are different funds that can be utilized for retirement and education costs, and these often provide savings on taxes. Learn about all of these and try to maximize their potential.
Managing money as a family is far different than doing so as an individual. Follow the above advice to maximize your financial standing.