If you sometimes feel like you’re living from paycheck to paycheck without ever really knowing where you stand financially, then you may need to learn some basics of household finances. Check out the quick lessons that follow so that you can get your money and your life in better order.
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Your first lesson must be in budgeting. If you haven’t yet created a household budget, do so now. List sources of income and expenses in separate columns, and see how they balance. If your income is greater than your expenses, you’re in the black and off to a good start. If your expenses are topping your income, however, you are going to have to make some changes to balance your budget.
Those changes will likely involve cutting expenses. Look through your expense list, and see what you need and what you don’t need. Pay close attention to the amount you spend for entertainment. Perhaps you subscribe to several streaming services or go out to eat or to special events frequently. If you’re in the red, then those are some of the first things that need to be cut. Check your cell phone plans, too. You might be paying for more than you use, and cutting back could save you money. While the process may be painful at first, the health of your household finances demands these cuts.
You should also examine your level of debt. Compile all your debt information into a single document. Include the type of debt (like mortgage, car loan, short-term loan, etc.), the names of lenders (like MaxLend or your bank), the amount borrowed, the amount still owed, the monthly payment and due date and the interest rate. With all this in place, you’ll have a full picture of the debt you need to manage. Cutting expenses can help in this area, but you might also think about debt consolidation or talk to a financial adviser for more information.
On the other side of the coin, your household finances could benefit from increasing your savings. Set goals for yourself in this area, or try a savings challenge like the 52-week plan. You can get the whole family involved. Encourage each person to give up something once a week or once a month and contribute the money saved. Some of your savings should be left alone for future contingencies, but you might also save for vacations or special purchases. Start a designated savings account at your bank so that you aren’t tempted to spend these funds.
If your budget is badly out of balance and even cutting expenses does not bring you into the black or if you have a special savings goal in mind, then find ways to earn extra money. This might mean taking on a second job. There are plenty of freelancing options online these days, or you could run errands, clean houses or pet-sit. Alternatively, you might look through your possessions and sell some things that you no longer use or need. The extra money you make could help your bottom line.
Never neglect your household finances, for they are critical to your family’s welfare. Try some of these tips to make sure they’re in order.