These tips work very well in good or bad economic times
Managing family spending is essential to accomplish a variety of goals from saving for a reason, retiring in style, educating the kids, and covering unexpected expenses. But, establishing a solid financial plan will also help your family survive recessions and other setbacks.
These 5 tips cover some important aspects of your cost of living and will bring happiness to your family as a bonus. A common misconception is that financial literacy is for people who are struggling to make ends meet. However, those households that plan and monitor spending are better equipped to achieve their goals.
Most of the tips are basic because a solid financial base sets your family up for long term sustainable success.
1. Create a Spending Plan
Nowadays it’s challenging to keep living expenses under control due to how easy it is to buy anything and everything online. A spending strategy can help you keep track of your spending and control your online expenses. It’s a great tool for monitoring your daily financial life.
A spending plan allows you to match your payday with your bills due date, list your spending by categories, set spending limits for certain items, track the cost of living over a month or 2, plan for future expenses, and much more. There is no universal spending plan tool, so you may have to try several before finding one that works best for your family.
Nevertheless, when a spending plan is used correctly, it is like placing your finances under a microscope. You will get a close-up view of where your money is going.
2. Set up an Emergency Fund
Unexpected expenses such as home repair, a trip to the E.R., job loss, or natural disasters can wreck your entire finances for months. An emergency fund allows you to pay for these types of expenses without crashing your budget.
There is published data that states most people do not have $400 in their emergency fund, but even having $200 available for unexpected costs is better than having nothing. Consider using your tax refund to increase your emergency fund. As a volunteer tax preparer most of my clients use their refunds to pay recurring bills and make new purchases. While this might be a good use of the refund, stashing a few bucks in the emergency fund is not a bad idea.
3. Reduce Spending on One Recurring Monthly Expense
Select one monthly recurring cost and focus on reducing the monthly cost. A good place to start may be the grocery bill. Researcher states that Americans spend nearly $500 per year on snacks. The findings included all types of snacks. The study commissioned by a chocolate company revealed that 18% of participants would give up all their electronic devices for one month for a lifetime supply of just chocolate and snacks.
As we experience life changes all recurring monthly expenses can be evaluated for cost-cutting. Review those recurring charges on your credit card and monitor your credit report at least annually. Review all of your monthly subscriptions make sure that they are serving the purpose intended.
4. Get Out of Debt
Although you won’t be able to pay off your debt immediately, it is never too late to start. For me debt was a cycle. I would live debt-free for a while and I would find myself in debt again.
This pattern repeated itself over and over until I discover how to stop the debt cycle. I am non-judgmental when it comes to people’s struggle with debt. If you need a psychologically boost to reducing your debt try adding a few extra dollars to each payment. This will reduce the amount of time it takes to pay off the debt and interest charges.
As you think about how much to spend on transportation, electronics, and vacation keep in mind that the least expensive choice may not save you money in the long run. There is truth in the saying “you get what you pay for.” Sometimes better experiences come with a slightly higher price.
5. Comparison Shop for Insurance
One of the easiest ways to find savings is to evaluate your insurance cost. Families typically carry health, life, auto, and home insurance. Some families carry additional options and riders to their policies.
It is always wise to revisit your policies before the renewal date and as family needs change. You may find additional savings if you have an excellent driving record or live and work in low traffic areas.
Life insurance cost increased about 8% on average as you age, assuming your health stays the same. Expect to pay 2 to 3 times more for life insurance if you are a smoker. However if you quit, the insurer’s usually will offer you the nonsmoker rate. I was surprised to find that only 57% of Americans own life insurance in 2019. This is down from a peak of 63% in 2011.
Use your defensive mindset when shopping for insurance. Without proper coverage a claim could decimate your emergency fund or push you into deep debt.
So let’s get the whole family involved in the fun and games. Sammyrabbit loves kids and he is hopping with a wide range of financial literacy activity books and videos that will develop young minds and keep them busy for hours on end. The teen in the family will enjoy having a personal guided journal to help them manage their finances. It’$ My Money Guided Journal is designed to enrich teenagers with simple but smart financial information while providing inspiring quotes and guided questions.
If you feel stuck financially you may want to check in with a financial coach occasionally to make sure that you are on track to meet your goals and that you’re not making mistakes or missing opportunities. Life events such as getting married or divorced having a child, dealing with the death or disability of a family member are all good times to consult a financial coach.
Regardless, of your family situation, a young nest, an empty nest, or somewhere in the middle these basic strategies should stay with you throughout your financial journey. Even if your finances are not an issue we all can use a refresher once in a while.
Guest Blog Post from – Bobby Clark
Bobby is the CEO and founder of Clark on Money Coaching Services, a firm that he recently started that specializes in helping dad’s who feel stuck financially find simple solutions to their frustrations while providing solid guidance toward goal achievement.
He is a graduate of Florida State University, where he earned a degree in Applied Psychology. He also earned a CFP Professional Education Certificate from the College for Financial Planning.
To learn more, connect with Bobby on Linkedin at:
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