How to Make Great Finance Decisions for Your Family

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Recent world events have a lot of us scrambling to overcome financial challenges. If you were able to keep your job after the events of 2020, you may have been able to build up savings but now face unmanageable grocery or housing bills. The tips below can help get a handle on your debt, build a logical budget for your clan, and power through.

Figure Out Where You Are

The easiest way to figure out where you are financially is to set up a basic spreadsheet. If you can't do this electronically, paper will work but this will be more helpful if you can sort it. Set up 4 headings:

1) Who do you owe?

2) What is the total amount owed (if applicable)?

3) What is the payment amount?

4) What is the interest rate?

You should be able to find the answer to all of these by going through your bank statements, credit card statements and bills from the last few months. You don't have to be perfect, but be as thorough as you can.

Determine Your Biggest Problem

For many of us, the biggest problem is that we have more months than money. If this is your biggest concern, sort your spreadsheet by Column 3, Payment Amount. Review the top 4 items on this list to see what you can do to reduce these expenses. If your top 4 items are housing, car payment, cable and electric, what can you do to reduce these? Can you move or take on a roommate? Can you check a car valuation tool so you can see upcoming changes in pricing for your car? Maybe even refinance the total balance out for 60 or 72 months to lower the payment? Can you reduce your cable package or cut it out altogether? Can you check your electric bill for when charges are highest and change when you do laundry and run the dishwasher?

For those who are hanging in there but can't save money, sort your spreadsheet by Column 2, Total Amount Owed. This is known as the snowball method. Now is the time to dump every extra penny on the smallest of these debts. Often, if you can pay off a credit card balance, you will get offers for 0% APR on balance transfers. Use these to lower the interest you pay.

Understand Your Pitfalls

As you become aware of your situation, it's time to get honest about your pitfalls. Are you an impulse buyer? Don't let yourself go to the store without a list. Do you tend to buy two when things are on sale? Inventory your home so you know how much shampoo, dish soap and body wash you already have.

Get Everyone On Board

Make things visual to get your family on board. If the idea of taking your children to Disney is impossible, put up a poster or image of your nearest county or State Fair. Set up a collection jar for this fun trip and connect it to your budgetary goals as a family. The next time everyone really wants to hit a drive-thru, head for home and feed them from your refrigerator. Then put $20 or $30 in the "fun family trip" jar. If your children see you use a card to buy things, money may not be real for them. Going back to cash as a family can make money real and reduce the "I wants" that you face when you go out with your children.

Make activities like reviewing the grocery store ads and finding coupons a family game. Check thrift stores for a small cooler for picnics.

Be Ready to Get a Little Radical

Every family has their own challenges and can find unique ways to save. If your children are a bit older, encourage them to find easy to prepare breakfast recipes so they can plan meals for a weekend. Book a "freekend" with your family where you spend no money from Friday afternoon to Monday morning. Pack a picnic on Saturday and go to the park. Make homemade pizzas and watch a movie together on Sunday.

Conclusion

Managing the money you have to care for your family is extremely personal. Instead of imposing a budget as a form of monetary jail will not work long-term. Don't try to set up a budget for your family until you are fully aware of what is getting in the way of financial sanity and success.