You have to implement effective money management techniques for families in order to run a financially successful home. The families that are the most stressed and disorganized are those that are struggling with money. In some cases, those same families have enough money to meet their needs, but they lack financial education. Here’s what you need to know to avoid not having enough money in between paychecks, and to save for your future.
Use Bottom up Budgeting
There are different budgeting methods to choose from, and the way that most families operate is not by using bottom up budgeting. It’s used mainly in the corporate and small business setting, but it can work well for a family. What you do is ask each family member to list all of their activities and the cost to carry out each. Your children need to be old enough to understand this, but you can work with your younger children to figure it out. For example, your teen might list violin lessons and after she figures the cost per lesson, she can calculate the monthly amount. This is not a one or two hour project. You’ll be surprised how many activities you engage in on a regular basis, and you may forget some. Here are some questions to ask yourself or family members as they work on their list:
- Where do I travel to each week? What are the costs of fuel and the activity itself?
- What technology do I use each every day? How much does it cost to use it monthly?
- What do I eat for snacks? What does a month’s worth cost?
- What are my activities associated with making a living? What do I pay out-of-pocket for each?
You might ask everyone to write down everything they do for a week in a notebook. Ask them to write how much they spent. You can keep a notebook for young children to track their activities and costs. You’ll then ask each person to create a budget based on their activities to submit to you. Each member can make decisions on cutting expenses at that point before turning it in. When you collect all the budgets, you’ll make an overall budget on how much you can afford based on your family income and savings goals.
Old Fashioned Coupons Work
The grocery budget is still one of the more expensive budget items for households. Any information for effective money management techniques for families has to include coupons. The truth is that coupons are no longer old fashioned. You can find promotional codes online and there are entire blogs dedicated to coupon deals. You can cut as much as 30 to 40 percent off your grocery bill if you are consistent about using them. Here are a few places where you can find coupons:
- The newspaper includes flyers with coupons printed on them.
- Watch for coupons at the bottom of receipts, or in addition to receipts, when you make purchases.
- Grocery store aisles have coupon machines for certain brand products.
- Check websites like ultimatecoupons.com for codes to enter at checkout when making online purchases.
- Some of the groups and organizations you belong to might exchange coupons.
- Check your membership benefits to see if you receive a discount on purchases at participating stores.
- Check out some cell phone apps that offer instant savings.
You also have to time the coupon just right to maximize your discount. Look for store wide discounts or sales. You may be able to use your coupons along with those discounts and get double or triple the amount of savings.
You may find it more convenient to pay your bills on a monthly basis, but in most cases it will cost you more. The extra costs are due to the frequency of payment, because employees of the company you’re paying have to work more often to process your payment. You have another choice, and that is to pay your bills annually. In most cases, you’ll receive a discount as a result. This will take planning on your part, because the bill you’re facing might be in the range of one to several thousand dollars for the year. You may need to plan a year in advance to save up what you need to switch to this method of bill payment. Here are some ideas for ways to help you get started:
- Allocate any tax refund to an annual bill.
- Ask the company to change the date due on a bill to buy you a month to save.
- Stagger the annual due dates so that all the bills are not due at once.
- Change tax withholding so that you get more money in your paycheck.
There are some bills that are not fixed monthly, such as an electric bill. Ask the company if they are willing to offer you a deal where you pay a fixed amount based on your average use. If the monthly amount works out in your favor, then consider paying that amount annually.
Start a Family Business
One of the best ways to teach and learn effective management techniques for families is in a family business. If you don’t already have one, consider it. A family business is also one of the best ways to grow and preserve wealth for current and future generations. You can launch a business part-time until it reaches a level where you feel comfortable making it your sole source of income. Some families have multiple businesses, based on the talents and skills of different family members. The key is to work together as a family, and after you train your children, give them management responsibilities over the financial and other aspects of the business. Here are some proven ideas for family businesses:
- Online bookstore
- Writing business
- Computer repair business
- Soap making business
- Family farm
- Online store selling a variety of products to a niche market
Start small and don’t take on any debt when you launch your family business. Give it time to grow, and reinvest in the business to get it to a level where you can generate a steady income.
Once you implement these effective money management techniques for families, you’ll have more money to save and to reduce debt. Further, you’ll find your way in a life other than one that consists of living from paycheck to paycheck.