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A Mom Navigating Life

Get Your Family Finances in Order

By: Donna Chaffins | Date: May 18, 2017 | Categories: Financial, Money Talk

Financial planning takes some of the stress out of family life. Many people associate budgeting with deprivation, but the opposite is true. When you have a good handle on your finances, it is actually freeing. It provides family security and allows you to set realistic goals for the future. Here are some steps to becoming fiscally secure and reach financial goals.

Get your family finances in order

Here are Some Steps to Get Your Family Finances in Order

Know what you spend

It is hard to create a budget when you don’t have a handle on your spending. Start with listing your major expenses: mortgages, car payments, utilities, phone bills. These are easy because they stay the same from month to month.

Tackling the harder categories requires you to evaluate your bank statement. Look over the past couple of months and write down everything you spent money on. Add up groceries, eating out, gas, entertainment, etc.

Once you have a general idea of where your money is going, spend 30 days keeping track of every purchase you make. Divide all your expenses from these 30 days into different categories: entertainment, transportation, childcare.

Add up the totals for each category before adding them all together. Subtract this from your monthly take-home pay. This will let you know whether you spend more than you make. If you do, it is definitely time for a budget. If you don’t, you have some advantages, but you could still benefit from financial planning.

Set goals

Motivation is not always easy. Starting a budget and sticking to it can be a lot like dieting. We tend to focus on what we can’t have instead of all that we can. Setting a goal can help you stay on track. Set one goal that would make you feel good financially.

Your goal could be paying off credit card debt or student loans. It could be putting money aside to go back to school. Also, set a fun goal. This could be a family vacation or even a new television. Whatever it is, it should be fun for the whole family.

Your goal could be paying off credit card debt or student loans. It could be putting money aside to go back to school. Also, set a fun goal. This could be a family vacation or even a new television. Whatever it is, it should be fun for the whole family.

Create a budget

Now it is time to put in the work. You know what you are spending and what habits you need to change. Your budget should never exceed your income.

Every family has different priorities. Figure out what you and your family can and cannot live without. Evaluate your past spending to determine where you can cut back. Remind yourself that you are cutting back so you can reach the goals you set in the last step.

Remember that insurance is not a place you want to cut back, but you may be able to find a more suitable deal for your family. Talk to local insurance agents. Review your phone bill. Are you paying for a more robust plan than you actually need? Don’t just wing it.

Evaluate your past spending to determine where you can cut back. Remind yourself that you are cutting back so you can reach the goals you set in the last step. Remember that insurance is not a place you want to cut back, but you may be able to find a more suitable deal for your family.

Divide your money into four quadrants:

  • Spending
  • Saving
  • Sharing (charities)
  • Investing

Allocate a certain percentage to each category. You can even set a hard monetary limit for entertainment and eating out.

Financial planning is never fun. Getting your finances in order is rewarding. You can plan for the future with confidence.

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