A family binds together by love and sweet memories. It is the place where the kids grow up, and where a couple learns more about responsibility. And finance becomes something that is vital to a family’s wellbeing.
Kid’s education needs money. There are short and long-term family goals that also requires money. Family finance is central to the ability of a family to advance and reach their dreams. And the key to a stable financial condition is a smart management skill.
Read below to learn more about family finance management.
Having separate money to respect each other’s privacy is alright. But there has to be one financial manager, mainly when it deals with family expenditure.
Let us define family expenditure as any expenses which are for the good of all family members, such as daily meal expense, transportation cost, and big expenses that will use up family’s saving. By centralizing the money in one person, and let him/her regulate will make planning much easier and enforce discipline to the rest of the family.
Each member of the family should have the right to write their needs in the form of a wishlist, and then to report it to the family financial manager. Even the manager should have the opportunity for doing this too.
After writing the wishlist, the parents in the family should decide which needs should be prioritized first. For example, you want to have a new travel bag because the existing one is already worn out and you need it fast because you are going to have a business trip soon, but at the same time, your daughter wants to have a bike, and she has never had one before. The financial manager should be trusted to decide such a matter, whose wishlist will get realized first and whose should be postponed.
The main book-keeping should be the job of the financial manager, but the other family members need to report their expense too. It will be a fun and educational project to ask each of the family members to make a weekly, monthly, and yearly financial reports. Kids will learn how to be responsible with money, and adults will have the chance to show their kids how life expense at their stage is.
Make everyone get used to noting detailed expense and appreciate even the smallest change. Give rewards to the most prudent family member.