Family Money Management
A successful family money management strategy is an essential part of attaining financial freedom for any household. Budgeting finances, controlling family spending, developing financial plans, and teaching children in money matters are all part of the process.
Parental Role in Family Money Management
Similar to a business, a family needs a manager or set of managers that are in charge of the finances. The parents, of course, take on that role in the family. It is essential that the parents agree on financial priorities for the family. Without agreement about finances in marriage, money issues can become a huge source of stress for the entire family.
Household Budgeting and Planning
Good planning is essential for family money management and should take place on two levels. First of all, the parent(s) should develop a strategic or long-term plan for finances. This can be accomplished by developing a financial freedom plan. This will help clarify and prioritize goals such as saving money for college and financial planning for retirement.
The second type of planning for family money management is tactical or short-term. This involves personal budget planning in order to control family spending on a routine basis. This free, personal budget worksheet is an excellent tool to help you through the household budgeting process. An envelope budget approach, where cash is put in envelopes designated for specific family spending purposes, can also work well for families.
Money Management for Kids
The dynamics of a family environment can make it challenging to manage money. Like most adults, children often find many things that they want. They hope that the family pocketbook will make their wishes come true. Parents often must make tough decisions to prioritize the best way to spend limited family resources with respect to their children’s desires.
Even if the family has unlimited resources, it is still best not to buy children everything they want. Besides not spoiling them, it becomes a very important lesson in money management for kids to help them distinguish between need vs. want and learn the importance of saving money.
A good way for parents to teach their children in handling money is to make them “managers” of their own finances. Consider giving them an allowance to cover certain needs and encouraging them to save their money for more expensive purchases. As they get older, suggest they get jobs to supplement their allowances. A work experience is one of many lessons in money management for teens that will help them lay a foundation for financial freedom later in life.
When it comes to money issues, families have unique needs. As a parent you have duel roles in family money management. You need to effectively manage money in order to meet the material needs of your household. Equally important, you need to teach your children in money management so that they can grow up to be adults who are responsible with their own finances.
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