How to Manage Money in the Family (Part 1)

Proper money management should be at the center of any relationship, because knowing how to manage money contributes to the success of any relationship. Great care should be taken when dealing with money matters within the family. We will examine three main components that contribute to good money management, these are; budgeting, saving and investing, and debt management.

The family should be seen as one unit; so therefore, each person’s action will affect the other. This is particularly a point to be mindful of when it comes to money earned by family members, in particular, husbands and wives. It is a fact that the husband is charged with the responsibility to provide for his family, however, due to the harsh economic climate, financial planning is sometimes shared between both husbands and wives. With this in mind, the income of both partners most be viewed as the family’s income and not their individual income.

With that said, let us consider the issue of budgeting. What is a budget? Well, simply put; a budget is an estimate of income and expenditure for a set period of time. In order to calculate your budget, you first have to know the amount of money coming in and the amount of money going out and when. Having a budget gives you a clear picture of where your money goes, and it also shows you where you might be able to save. In addition, a budget will help you to see whether or not you are living within your means. It can be a challenge to change the amount of money coming in, but you can control what goes out. So, before you buy that lovely pair of shoes you just have to have, you may do well to ask yourself, “Do I really need it?” Your answer to that question may surprise you.

A personal budget shows you exactly where your money is going, so you can determine if there is anything you can do without. No matter the amount of money you earn, making a budget is essential for effective money management.

How important is it to save? The fact is; if you are earning but not saving, it is as if you are trying to full a plastic bag with water that has a hole in the bottom. An impediment to savings has to do with how we view savings. It is common practice to ensure that our necessary expenses such as, utilities, food, rent, and mortgage are paid first, savings; however, is never usually seen as a necessary expense. We need to change this view; savings should be seen as a necessary expense, and as a result, should be given first priority. Here is something to consider, all expenses results in money leaving you; however, if savings is considered to be an expense, then it will be the only expense that pays you.

We must always think of ways to save money, even though this may be a challenge; a good place to start is to have our savings being deducted from our pay before we receive it. So, you are now ready to save as you have never done before; wait, it doesn’t end there, you are now ready for the next step; investing.  Now that we have managed to save some money, we now need to examine ways to invest what we have saved. This will be considered in our next article.