7 Tips for Managing Household Finances
Every family desires a healthy and sufficient financial condition. In family life, living needs become more diverse compared to when you were still single. The diverse living needs and increasing number of family members make us have to be wise in managing household finances so that the family's financial health is maintained. What is the way to manage good household finances?
Consider the following tips for managing household finances:
1. Combine Husband and Wife's Income
If you and your partner both work, it's best to combine both incomes into one so you can manage it more easily. In addition to being easier to manage, family income combined from husband and wife can help you control expenses because every expense must be acknowledged by your partner.
2. Provide Emergency Funds
One important thing in managing household finances is providing emergency funds. Emergency funds are funds provided for things outside of routine expenses, for example when a family member suddenly falls ill or other things that are sudden and out of the ordinary.
3. Record Expenses and Income in Detail
Household needs are quite diverse and numerous, therefore it's best to record in detail every income and expenditure. Meticulous financial records not only help you know where your money is allocated, but can also be used as an evaluation of your financial condition.
4. Set Aside Savings for Children
Don't forget to set aside some income for children's school fees. School fees for children these days are increasingly skyrocketing from year to year, therefore you have to prepare it early. Set aside 10 to 20 percent of your income to be saved for education funds or invest it in gold bars as an investment.
5. Save Some Money Early in the Month
Savings should not be done when your salary starts to dwindle, because your money is at risk of running out so your intention to save cannot be realized. It is best to save in the early months when your salary has just been received. Determine the amount you intend to save and immediately set it aside.
6. Make a Monthly Shopping Budget
Before entering the new month, make a monthly shopping budget. Make details of things that need to be bought for household needs, things that may need to be paid such as electricity, water, fees, or installments, savings, vacations or other things that need to be budgeted. Make a detailed budget with estimated amounts, then try to comply with the budget you have made. If there are things that happen outside the budget that has been made, you can take emergency funds to meet these needs.
7. If You Have to Borrow, Choose Productive Debt
If there is no urgent need, it is best to avoid interest-bearing debt. But for certain conditions that require you to borrow, choose productive debt. Some examples of productive debt include home loans for home ownership where the asset value increases from year to year, business development loans and so on that are productive. What should be avoided is unproductive debt such as debt to fulfill lifestyles or unproductive things. So borrowing is okay, as long as you borrow for the right reasons, besides making sure your debt does not exceed one third of your total family income so that your financial condition remains stable.