Money Management is a must-have life skill for every individual. When two financially literate individuals come together to start a family, you can expect a certain standard with the family finance management. However, with the changing economic climates, the hike in the price of goods, singles are having a hard time navigating their finances in this time, not to talk of families, hence this guide.
Handling your finances as an individual may not need as much precision, but when a family is involved, money management isn’t a skill you wing. Deliberateness comes to full use in navigating family finances. There are certain expenses that need to be taken care of to ensure the seamless operation of the family. Managing your family finance is mostly about meeting your expenses and setting aside money for emergencies and savings. These and more are what we’ll be addressing in this article. Here are our top five tips for managing your finances as a family:
✍🏼1. Create and Stick To A Family Budget. This Helps with Tracking Your Finances:
Draft a family budget and stick to it. When drafting this budget, be honest about the items/habits that the bulk of the money goes to, this way you are bringing every aspect of your finance and life to the light so you’re not wondering where all the money went to. Apportion funds to these items listed so you can keep track of your finances.
✍🏼2. Spend Your Money Wisely:
When you’re done drafting the budget, it is important to prune the list, to decide what is important and what is not; we classify them as the can-do without(wants) and the can’t-do-without(needs) then take out the items that need to go. Whatever monies assigned to them earlier can either be allocated to savings, investments or your emergency funds.
Your wants as a family is important so we advice you craft a reward system to gift family members these wants at specific landmarks or timing. The lesson to learn here is moderation, not splurge or spontaneous spending.
✍🏼3. Leave A Wiggle Room In Your Finances For Economic Changes:
Every Nigerian can attest to the fluctuating prices of consumer goods. Therefore, it is important that you allocate funds in your budget to expected changes in the economy such as inflation. This is how to go about it: mark up the price of items in your budget up to the percentage/rate of inflation. This can vary per month or quarter. If the prices remain the same, you can rollover the allocated funds to the next month. The goal here is to stay readily prepared for whatever changes occur and not disrupt the quality of life you are currently building as a family.
✍🏼4. Set Aside Money For Unforeseen Circumstances And Expenses:
When addressing money management as a family, YOU WILL NEED AN EMERGENCY FUND! This is the family’s safety net. The funds assigned to the emergency fund is to handle life situations that are unplanned; this can vary from job loss, a fire outbreak to name a few. In the case where there is no insurance covering, the emergency fund buys the family some time and cushions the effect of the loss till they are able to get back to the usual. This is how to calculate and set up an emergency fund for your family: the family’s upkeep per month multiplied by duration (e.g. six months or more, depending on the duration you seem fit )= your emergency fund. Now that you know how much your emergency fund is, you can then decide how you intend to set the money aside and for how long.
Our advice would be that you set up a plan on Ziing for the period you want, and then fill in the amount you want deducted and at what frequency you want the deduction to happen, then lock the plan! And that’s it, you have set up a safety net for the family.
✍🏼5. Live Within Your Means And Stop Accidental Overspending.
One of the best ways to manage your money as a family and grow your wealth is to ensure that you live within your means. It is easy and tempting to fall into that trap of taking loans to spend on wants. You can do this if the goal is to keep living from paycheck to paycheck, but if you looking to get control of your money, grow and preserve your wealth, then living within your means should be your mantra.
If you are looking for an app to help you build your financial discipline as a family, Ziing is the app you need. You can save, invest, pay bills and track your finances from the comfort of one app. Download the Ziing app from Google Playstore or from Appstore and start saving!
Do you have more tips to share that has worked with your family?
Share with us in the comment section!