Married couples need to know how to manage household finances. Because if not handled carefully, spending can spiral out of control no matter your income. Because the needs of the household itself are very diverse. There are child-rearing funds, emergency funds, funds for everyday needs, vacation funds and so on. Especially if you intend to buy a car, house, or another asset. You certainly don’t want your monthly income to disappear due to overspending. Come learn how to manage household finances properly!
The correct handling of household finances should be adapted to the family circumstances. You can start talking to your partner about personal needs, household needs, and planning for the future. A study in the Journal of Marriage and Family compared how women and men handle money. The results suggest that women are better at managing money than men. It sure is still good to discuss with your partner. Working with your partner to manage finances is a good move. Because it ensures not only more stable finances but also a better marriage relationship. A study in the Journal of Financial Counseling and Planning states that financial factors determine 15% of marital satisfaction. Because of this, every couple needs to know how to manage household finances.
Ways To Manage Household Finances
1. Provide information on income and expenses
Keep a notebook with detailed financial reports detailing daily income and expenses. This way of managing household finances is often taken lightly and is not important. Even if this will be useful in controlling the money we spend daily. So that we can understand where the effort is too high, besides using books, you can also use financial applications on smartphones to make it easier to monitor household financial transactions.
2. Create detailed and detailed budgets
Inefficiency in managing household finances often occurs when you use the money to get what you want, even when your wants aren’t necessarily what you and your partner need. The best way to use a small income is to create a monthly spending plan with a detailed written budget. How to manage finances in a month? You can spend the money that you and your partner earn according to the prepared plan. When it comes time to buy the essentials, you and your partner will already have a budget to spend. However, only use the money within the prepared budget, as the remaining money has been allocated for other purposes.
3. Save on the Internet with a quota package that can be adapted to your needs
When all information is needed quickly, internet service is an important thing that must belong to everyone in a household. Because the Internet supports many activities such as work, study and entertainment in the family. When choosing the right internet package, it is important to consider speed and price.
4. Sign up for insurance
Just like saving for emergency funds, insurance is also very helpful when something unexpected happens. You can take out health insurance for each family member. So if a family member needs healthcare or medication that is quite expensive, you don’t have to worry or take money from savings.
5. Set financial priorities and goals
Any family must establish priorities and financial planning goals when manage household finances. Determining what you want to accomplish with your money can make creating the right budget that much easier, even if your family’s income is currently low. It will also make you smarter when spending money.
By prioritizing, it helps you manage your household finances effectively. Creating a prioritized list makes budget allocation and spending clearer and more organized. On the other hand, this list of priorities for managing household finances is intended to serve as a reminder that priority needs must be met first. Then, if there is enough left, it can be allocated to secondary and tertiary markets.
6. Using the 50-30-20 method
One method that can help you save is using several ways, such as the 50-30-20 method. This is a financial method popularized by Elizabeth Warren, a United States Senator, in her book All Your Worth: The Ultimate Lifetime Money Plan (2006), as reported by The Balance Money. This method can be a practical way to manage family household finances. It does this by reserving 50% of income for basic needs, 30% for fulfilling personal desires, and 20% for savings or investments.
7. Maintain the debt ratio
Avoid going into debt in a household as much as possible. Because debt can hinder the achievement of financial goals, and if it is not paid off regularly or on time, it will result in large losses. Also, maintain debt ratios by ensuring the obligation to pay is at most 30% of income, so finances are not impacted.
8. Set up an emergency fund
One way to better manage household finances is to set aside money for unexpected events or circumstances. This avoids undesirable circumstances such as job loss, illness or car damage. Everyone needs an emergency fund for 3 to 6 months of expenses.
There are several ways to manage household finances with your partner that you can apply for. Some of these methods can be modified and adapted to suit your family’s needs. By learning how to manage finances for your family, you’ll become smarter and more economical when shopping. Much luck!