Four tips to unclutter your family finances

Today’s guest post is from reader Alban Guillemot who writes in Australia for a personal finance and credit card advice site, creditcardfinder.com.au.

Families come in many shapes and sizes, but most of them have one thing in common — they want financial security. Simply adjusting your perspectives on money and spending and openly talking about your goals as a family can help to ensure successful and uncluttered finances:

  1. Be clear on your goals as a family. Open and honest communication with all family members is important because if one person is not convinced of the family’s financial plan, those plans can be sabotaged by overspending and ignoring the budget.
  2. Avoid social competition. As you make your budget for the extras your family would like, consider why you want what you want. Make sure you are not making spending choices based on what you think someone in your income bracket and your neighborhood should have, but choose extras you want and would enjoy. As soon as you start spending to keep up with your friends and neighbors, you have stopped focusing on your family’s needs and wants
  3. Consider your family before making a purchase. Always keep your family budget in mind before you make a purchase that has not been accommodated for in the budgeted. This also goes back to the previous point about why you are making the purchase — is it a purchase that is good for the whole family? Consider the impact of an impulse off-budget purchase on your family’s savings and goals.
  4. Hold regular family budget meetings. It is not enough to create a family budget, you have to also maintain and monitor it to make sure it is achievable and accurate. This can be done at a regular family meeting, where you also discuss how each member feels about the budget and the spending, and whether they can see room for improvement, or suggest a change of direction.

Discussing finances with your family with honesty and respect is the key to successful family finances, but while discussions are important, you also need to be able to implement the systems to follow through. Once you’ve completed the four tips from above, you’ll find ways to customize each system to your family’s needs and find a way to ensure your family is financially secure now and into the future.

9 Comments for “Four tips to unclutter your family finances”

  1. posted by Dawn F on

    Might I suggest also to teach young children about the importance of saving – the younger, the better! Even a young child can be taught to save a portion of their money whether it be from allowance or gift money. This particular lesson will benefit them throughout their lifetime.

    I would also like to share the importance of making sure both the husband and wife are completely and fully aware of where the financial accounts are, where important documents are kept, where keys are to everything, etc., etc. My neighbor went through a truly traumatic experience when her husband died unexpectedly and she had no idea whatsoever where the money was, how much they had, where documents were located or even what the passwords were to their computer or bank accounts. A truly horrible situation made even worse by being uninformed about the family finances.

    A simple, clear, concise and UPDATED spreadsheet with ALL pertinent information can save your spouse and/or family from such a burden.

  2. posted by timgray on

    Best way to unclutter your Family’s finances….

    http://www.mint.com

    Clear, concise and keeps you on track.

  3. posted by TanyaZ on

    You should also decide on what accounts the family needs to have and what role those accounts play. I admit we have too many (husband insist to have different accounts for different purposes), yet since each account plays a specific role, it works. Well developed processes will help you stay on budget.

  4. posted by zilla on

    In my RSS reader configuration, the title of this post showed as “Four tips to unclutter your family”

    Imagine my disappointment when I clicked on the full article and found it’s about finances.

  5. posted by April on

    @TanyaZ, sounds like he uses an envelope system, only instead of putting cash in various envelopes, he keeps it in various bank accounts. :)

    @zilla, you made me laugh!

  6. posted by TanyaZ on

    April, yes, it is similar to the envelope system, just on a more general level. Categories include RE taxes, vacations, medical expenses, major car repair/purchase, mortgage and utilities, etc. The idea is to have all of the key and irregular expenses covered, and the rest is left for day to day spending.

  7. posted by Jay on

    Several points:

    (1) When people marry, one of their first decisions is whether to merge their finances, e.g., to establish joint accounts or maintain separate accounts.

    Establishing joint accounts is the easiest and most clutter-free plan. My belief is that unless there is some compelling reason (such as wanting to save certain monies for your children from a prior relationship, or keeping your spouse from spending too much money) to keep your spouse from having access to an account, joint accounts are the way to go.

    (2) If possible, consider having accounts at as few financial institutions as possible. What few mutual funds and stocks we have are at the same mutual fund company. In that way, we are not bombarded with statements from various companies, and all our accounts are visible online with just one login.

    (3) @TanyaZ – Interesting approach that works for you and perhaps others, and proof that what is clutter for one person is not clutter for another. I, personally, would find all those different accounts to be complicated, confusing, and, for me, clutter.

  8. Avatar of

    posted by Irulan on

    @TanyaZ: My husband and I do something similar to your family, only instead of separate accounts we break it down in an Excel workbook, with each “account” or type of expense having its own sheet that feeds into the front page. This way, we only have 1 major savings account but can sub-divide it. We’re also looking at opening up an online account, as some places (e.g. INGDirect) let you break your account down into sub-accounts. That might be something for your family to look into if you feel overwhelmed by the number of accounts you have.

  9. posted by Daniel on

    I wouldn’t be so quick to rule out social competition; in fact, how you’re doing relative to your peers contributes significantly to happiness.

    I engage in these social competitions because I know others can’t keep up. I happen to like luxury cars and would never settle for a non-luxury car. I don’t need it, but it’s important to my happiness and feeling of well being.

    It is possible to have both uncluttered finances and do well materially. Planning for your expenditures goes a long way towards reaching your goals.

Comments are closed.