Your finances are a significant part of your life, whether it’s family or personal finances. However, many people don’t practice good habits or methods when it comes to budgeting or saving.
Luckily, we’ve created this article to inform you about family and personal finance to start on the right track towards financial efficiency.
Family Finances
Before you can start, gather any information about your family’s income and expenses. All the pay stubs, bills, any document that shows money coming in and out, and start with a plan.
Establish a Family Budget
Once you’ve gathered all of your data, create a family budget that includes:
- Groceries
- Children expenses
- Bills
- Loans, mortgage, or rent
- General expenses
- Subscriptions
- Any other expenses
- Emergency fund
Once you’ve got a bigger picture of where your costs are coming from, compare it to the family income, and ask the following questions:
- What percentage of our income are we spending on each category?
- Where can we cut costs?
- Is this expense worth it?
- How can we become more frugal?
Balancing the family budget is a team effort, which becomes more evident as you work together to reach your goals.
Pay Off Any Debt
Create a debt management plan to pay off any obligations that may be adding to any financial stress. To start, consider the following:
- How many credit cards do we have to pay off?
- Which loan or card has the highest interest rate?
- How can we begin paying off our debts?
- Does our student debt need consolidation?
- Should we refinance to reduce monthly payments?
The easiest way to begin paying off debts is to assess your income and the monthly payments due.
Start with reducing card interest rates by transferring credit card balances, paying them off, or getting a new credit card with an introductory 0% offer.
Lower Taxes
Families have various tax benefits that can reduce expenses and how much you owe to the government. Some tax breaks to reduce taxes as a family includes:
- Study dependent claims on taxes
- Take advantage of child care tax credits
- Earned Income Tax Credit
- Student loan interest deduction
- Higher education tax credits
- Adoption tax credit
Emergencies
Every month, set aside a percentage of your income in a separate savings account for emergencies. A high-interest savings account or a retirement account can even increase the amount over time.
Set Goals
Being a family unit means setting various goals, such as buying a home, retirement, or setting up a college fund for your children. Make sure to discuss these goals as a family and track your progress regularly.
Personal Finance
Today, most people do not have their personal finances in order, let alone a savings account.
Get ahold of your income and expenses, start a budget, set goals, and plan for the future.
Budgeting and Saving
Begin collecting all of your income and expenses, such as Pay stubs, W-2s, or any other sources of income.
An easy way to keep track is to evaluate your credit card and bank account statements.
Start creating your budget categorizing the following expenses:
- Food
- Bills
- Loans, credit card
- Child expenses
- Leisure expenses
- Miscellaneous
If you have trouble tracking your expenses, consider a budget app that records your payments every week. Collect receipts to get the most accurate portrayal of how you spend your money.
After you’ve gathered all of your financial information, start becoming more frugal and set budgets for each category.
Begin eliminating wasteful expenses, and start saving. Open a savings account with your current bank or a high yield savings account. Set aside a percentage of your income every month into the account and watch it grow!
Plan for the Future
Once you begin budgeting and saving, consider planning for the future, such as retirement, buying a home, or starting a family.
Starting college or going back to school is also a big decision that requires financial planning to avoid massive debt in the future. You are also less likely to take out loans with high-interest rates if you save enough to pay for a few semesters.
If you wanted to start a business, saving money is a great starting point, including investments.
Dodge Debt
Avoid debt by paying credit cards or loans on time or before they’re due.
If you have debt, start with the most costly expense and slowly begin paying it off every month, especially high-interest accounts.
A great way to tackle debt is to increase your income by seeking a promotion, getting a side-hustle, or a weekend gig.
Start Saving Today!
Getting a handle on your family and personal finance to plan a budget, start saving, and set goals is a great way to reduce financial stress in the future.