UACES Facebook 5 Money Management Tips for Families
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Stressed about money? Here are 5 tips to help you manage your finances, so they don’t manage you!

It’s not really what you have, but how you manage what you have.” Efren Ll. Cruz

 

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As a family and consumer science agent, one aspect of my job is personal finance education. It’s not an area I’ve spent a ton of program time on because let’s face it….getting folks interested in financial education is no easy task. It can be a sensitive and somewhat uncomfortable topic for people, and I get it. But when it comes to how many American families are handling their finances, the statistics are pretty concerning. The stats related to saving for emergencies, retirement, and the average debt load aren't very good. And the lack of financial literacy skills is a real problem. There’s no question that personal finance education is important and one of the best forms of education that we as consumers can acquire in our lifetime.

April is recognized as National Financial Literacy Month, so I wanted to share my top 5 basic money management tips for families.

1. Determine Your Roles and Responsibilities     

Brandon and I could not be more different. I’m a planner by nature. I like to know exactly where my money goes. I write in my planner what month big items are due (life insurance, holidays, birthdays, etc.) so I’m prepared to pay it. My husband? Not so much. Before we married he carried bills around on the dash of this truck and I’m pretty sure he walked them into the business the day they were due. Stressed. Me. Out. According to Dave Ramsey, I’m clearly the nerd and he is the free spirit. When we married, we decided to discuss all of our financial decisions together, but I would manage the day-to-day responsibilities. No matter how you divvy up the financial tasks in your home, both partners need play a role in creating a system that works for your family. 

2. Set Specific Financial Goals                                                                                                                                                         

It’s crucial to plan ahead, set goals for future spending, and save in order to reach those goals. Otherwise, daily spending on unimportant things can keep you from ever achieving the things that are really important to you. To reach your goals, you first need to agree on what they are: buying a home, starting a family, becoming debt-free? Be specific and give yourself a timeline; then write them down. People who write their goals down are much more likely to achieve them.

3. Create a Spending Plan.

The best way to gain control over your finances is to create a spending plan. This can be challenging at first and it may take a few months of tracking expenses to really get the hang of it.

Here’s the basic rundown of a spending plan:

  • Expenses that stay the same each month (Ex: housing, car payments or other monthly installment credit payments) are fixed expenses. These are the easiest payments to remember and the hardest to change so it’s a good idea to write them on your spending plan first.
  • Expenses that change from month to month are referred to as flexible expenses and include things like food, clothing, gasoline, and most daily expenses. The envelope method is a great way to control these by the way. Write how much you can afford on your spending plan, and put that amount in an envelope labeled for that category. When the envelope is empty, stop spending.
  • Periodic expenses that don’t occur every month are the hardest to remember and can be real budget-busters if you don’t have the money set aside for them. Write these in your calendar and make a point to save for them.

My favorite online budgeting tool is Every Dollar. It’s super easy to use, it syncs across devices (desktop and phone), and it’s FREE!

4. Make Saving a Priority

We’ve all heard “How can I save when I don’t have a dime to spare?” I know. It’s hard and it often requires tough decisions and sacrifices.

Here are the biggest ways our family makes saving a priority: 

  • We use payroll deductions. It’s much easier to stick with a savings plan if it’s automatic. Each month a portion of my check is deposited in our personal savings account, and both of our children’s.
  • We save “bonus” income - tax refunds, my husband’s overtime pay from North Little Rock Electric, money received from gifts, refunds and rebates.
  • Once we pay off a loan (if other loans are not due), we continue to make “payments” to our savings account. If we weren’t used to having the money anyway, why not save it? This strategy works.
  • We collect loose change. We have a small tin bucket that stays in our laundry room and I fill it up every time I clean out Brandon’s jean pockets. Once it’s full, I deposit it. It adds up and every penny helps.
  • If it’s been a month with some pretty big financial hits, we have a nothing week where we try not to spend any money. I don’t go to the grocery store; we clean out the pantry instead.

There are so many ways to save here and there. Just start somewhere. You won’t regret it.

5. Take Time for an Annual Review                                                                                                                                                   

At the beginning of the year, Brandon and I always sit down and take a look at our finances. We talk about what’s coming up, what we could do better, and what our goals should be for the next year. I don’t know about you, but it seems like every year flies by faster than the last. That’s why it’s critical to take the time to reassess your financial situation. One of the best ways to get a clear view of your financial picture is to calculate your net worth, which is basically what you own (your assets) minus what you owe in debts (your liabilities). Your net worth should be positive and growing from year to year. Find out your net worth quickly and easily with this free worksheet!

Getting a handle on your finances can be challenging and it takes some getting used to; however it’s worth it. Small changes can make a big difference for your bottom line.

For more information on all things personal finance related, check out our website. Dr. Laura Hendrix, Associate Professor for Personal Finance and Consumer Economics, posts monthly money tips and provides regular updates on Facebook

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