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4 Ways to Carefully Manage Family Finances

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manage family finances | 4 Ways to Carefully Manage Family Finances.

Entering the ladder of marriage is a happy time for a married couple in exploring a new life. But keep in mind that, starting a new family is not as easy as imagine.

There are many things to think about more carefully, especially you have to learn how to carefully manage family finances. A change in mindset must be made, because your money is mutual money. So, it cannot be used alone like when you were single.

Regardless of the amount of income, there are still people who are short of money at the end of the month. The real problem is not the amount of income, but how carefully it is managed.

Actually managing family finances is not as difficult as one might imagine. What needs to be done is that communication regarding the entry and exit of money must be done honestly, as-is and transparently without being hidden.

This becomes easy when mutual trust is built and maintained for each other. Having a little or a lot of money is not a problem, as long as you can manage it carefully and precisely.

4 Ways to Carefully Manage Family Finances

If you want to know how to carefully manage family finances, you should learn the following simple steps:

Step 1: Track Your Daily Shopping Needs

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The first step you should take is to track your daily shopping needs. Pay attention and research where the money is spent in daily life. It is better to avoid shopping for expensive items that will spend a lot of money because the more money you spend to buy expensive items, it will reduce other budgets so that they have difficulty spending other necessities.

In fact, it is not uncommon for spending on these expensive items to spend overtime or other income. Do not be too easy to lose money by spending money here and there on needs that are not really important, such as buying snacks, drinks, and so on.

The best way to find out where the money is being spent is to keep a shopping log. Track all expenses for one day or at least every week. This step is very easy and quick to do, it only takes a few minutes, but you will be able to find out where the money is running out.

The activity of recording these expenses can be done alone or together with a partner. Know all the habits that add to your expenses and write down every purchase. No matter how small the purchase, such as snacking habits, hanging out in cafes, and so on.

This is not to judge yourself, but to know yourself better. By paying close attention to the habit of spending money on a daily basis, you can create a picture of your actual expenses, so you can make realistic spending choices.

Step 2: Compare Money In and Money Out

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After knowing where to spend money every day, the next step is to know the amount of income and expenditure of money each month.

Calculate carefully, how much money comes in, both from salaries and from other expenses. Then also count how much money came out. Calculate all types of expenses each month, such as:

  • Routine expenses, for example, grocery shopping and transportation every month.
  • Routine bills, for example, house rent, pay for electricity, pay for telephone, pay for water and insurance.
  • Unexpected expenses, for example, school registration, medical expenses, and invitation donations.
  • Remember that one of the best ways to take control of family finances is to create a budget and run with discipline. No need to make a complicated budget plan, just create a simple budget plan that helps to know and understand the money coming in and money going out of the family. So that it will show the ability to spend or set aside money every month. This simple bookkeeping can also help balance income and expenses, and try to set aside savings.

By knowing how much money you have, the amount of income, and all the bills that must be paid, such as electricity bills, telephone, monthly shopping, medical expenses, vehicle service fees, even the amount of credit card debt, home installments, or vehicle installments. You can calculate the range of remaining money for savings.

As with managing personal finances, saving is necessary to manage family finances. By having savings, you will feel safer and your family finances more stable.

Set aside an amount of money when you just receive your salary to save, so that the money you save is always available. Try not to use savings before it is really needed.

Step 3: Determine Your Priority in Spending Your Money

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The next step to manage family finances is to prioritize spending for the most important and urgent needs. This is very important to help strike the right balance between income and expenses and create savings.

One simple way to determine priorities using money is an illustration of dividing water in a large bucket into smaller buckets. Imagine that you have a large bucket of water that represents all your total income.

Then you have 3 or more empty small buckets representing the various expenses. Logically you will not be able to pour water into all the smaller buckets that have more total capacity than the water in the big buckets.

So, given the amount of water available, you should be able to divide how much water should go into each bucket or even if there are buckets that may not be getting water.

The point of the illustration above is that you have to be able to decide what is really needed and what is only desired. Because the boundaries between wants and needs are almost the same.

The two things look very similar, sometimes what is really just a wish can be turned into a need. So often people mistakenly define their wants as needs, even though not all wants are needs.

Honesty is required in making a priority scale. You have to be honest whether the item to be purchased is really a need or just a wish. An easy way to tell the difference is to make a list of needs and wants.

Each time you fulfill one of these, give a sign that the need or want has been met. Try to meet needs first, then fulfill your wants, but don’t overdo it.

Manage all the money you have, including where it is spent and how much can be saved. Make a realistic financial plan, not so ideal that you forget your own needs.

Step 4: Actions of Employing Money

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After having a financial budget, it’s time to take the final steps to take action according to the draft budget. Make all of these actions run automatically so that you will have no trouble carrying out actions within the budget that you have drawn up.

Such as: paying routine bills every month by directly deducting from salaries or allowances that enter the account. So, routine bills are debited directly from the bank account after the salary has entered the account. For example, to pay the following routine bills:

  • Bank loan.
  • Motorcycle, car, and home loans.
  • Credit card debt payments for electricity, water, and telephone.
  • The more and more varied the amount of income, the more it will increase the savings balance. If the number of bills varies, more savings will be deducted. So make sure the amount of the savings balance in the bank is enough to pay all the amounts of these bills.

Do It Consistently

The steps above should be carried out continuously, not only within a month. But the same pattern does not have to be for months only. It can also be made weekly for employees who are paid weekly.

It can also be used for projections and financial planning within a year. Without full awareness to comply with the budget made, there will be many types of sudden expenses and purchases of products that are wanted but are not really needed.

Managing household finances is more difficult than managing personal finances, but you must be sure you can do it and be willing to put in the effort.

Make sure your family is always awake and prosperous by managing finances properly. Good luck!

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