When you have a family, personal finances become family finances and affect everyone. Kids learn how to handle finances from the example their parents set, so it’s important that you set the right tone. Consider these tips on handling your family finances to make sure that you make the best decisions for your family.
Create and Use a Budget
Whether you’re a one or two income family, creating and using a budget will help you manage your money. Your budget should include every penny you spend: household bills, groceries, car payments, insurance payments, gas in your vehicles, and even the coffee you buy on your way to work. This helps you see where your money is going and where you can cut back if you need to.
Set up an Emergency Savings
You should already have a savings account, but you should set up a second one that is for emergencies. Your emergency account should ideally have enough money to cover 3-6 months’ worth of all of your expenses in case of a job loss or severe injury that keeps you out of work. But it can also be used for other emergencies, such as unexpected medical expenses or a sudden car repair.
Get a Good Mortgage
Renting is okay, but if you’re planning to stay put for a while, owning your home is a better deal. You may have lower payments, you’ll earn equity in the home, and you don’t have to worry about a landlord not renewing your lease. If you already have a mortgage, like those available from Home Mortgage of America, consider refinancing it if you can get a better deal than what you currently have.
Live within Your Means
Similar to creating the budget discussed in the first tip, living within your means is a critical decision that parents need to make. This means if you go from being a two income family to only having one income, you reassess your lifestyle and figure out what to eliminate to be comfortable with only one income. It also means if you go to two incomes after being only one, you don’t need to spend all that extra income. Be realistic about what you can afford.
Children will learn from their parents how to spend, save, budget and thrive financially. Showing them that you can handle your own money will help them handle theirs. If you need a class to help you learn to manage your money, take it. It will benefit the whole family.
Rachelle Wilber is a freelance writer living in the San Diego, California area. She graduated from San Diego State University with her Bachelor's Degree in Journalism and Media Studies. She tries to find an interest in all topics and themes, which prompts her writing. When she isn't on her porch writing in the sun, you can find her shopping, at the beach, or at the gym. Follow her on Twitter @RachelleWilber