7 Steps to Family Finances
Finally Freed From The Jungle!
Our application of family finances and our living cost has changed a lot from our family of two to 7 living off a single
income of a High School Teacher. It has it's challenges, but clear
long term written goals helps keep short term planning in perspective
and regulates our 'spending'.
I want to share some ideas that have helped us and I hope it will
supercharge your finance management through family budgets, income
statements, living cost, home budgeting, household expenses, debt
management, dealing with credit card debts, help with debt, getting out
of it, how to investment strategies and building up a savings plan and a
retirement plan from the start and how to get even more comfortable and
confident with your money
management. It's going to be a lot of info, but I will break it down
into 7 simple, quick & effective steps that get results.
Money Management Step #1: 10% Money Rules -- Give, Save, Spend
I will water it all down as much as I can, I will make it as simple as
possible to apply it today, so you & your family can reap the
benefits right away .
If it were taught in school, I would share these 7 financial education steps
10 % to Financial Freedom. This is personal finance 101 put into effective practice for your family finance management, and it works. Regardless of your family income, live practically within your means on only 70% of it. The 30% off the top is easily split to set your family finances in motion.
- Here is how the 3 10% splits work:
- 1st 10% is for Giving
- 2nd 10% is for Saving
- 3rd 10% is for Spending
This is the order of importance for your top 30% of earned income. Once done, the rest of your money(70% of your income) needs to take care of all your household & monthly expenses--variable, fixed and extras.
- 10% giving
--Give the 1st 10% of your income to a church or charity of your choice
- 10% saving
--Save the 2nd 10% of your income(1st building up your emergency cash)
- 10% spending
--Spend the 3rd 10% on you & your wife--You can be selfish together
Developing this habit has helped my financial intelligence and develop financial maturity in spite of 'normal' financial challenges. What has always helped me keep motivated is to think of these 3 things:
Get your emergency fund together quickly
Find a compound interest account(even yearly compounding is good)
If I earned $50,00--I get to keep $35,00. That IS
Little by little I have been learning this principle and applying it every month with our family finances on earned income. You Can Do It Too!
I will keep adding & sharing ideas, tips & strategies on these 10% rules.
Budgeting Step #2: Home Budgeting That Works
We have used ledgers to budget and account for every penny in our home budgeting--I am sorry to say it was not a lot of fun and we felt quite restricted and actually stressed about it. We have since developed a more flexible & effective household budgeting system that saves time & money.
It boils down to this: Write up your family financial needs and the total living cost for your family in an accurate monthly budget. Put some strategies in place, stick with it and keep a clear written down goal 'WHY' you are keeping a monthly budget. We like to work together discussing the needs and goals for the family and how we can incorporate these ideas into a realistic & flexible budget.
- Quick budgeting tips 101
- Discuss & work together on your family monthly budget
- Be as accurate as you can for your monthly needs
- Add in some breathing room for your expenses
- Avoid distractions--any obstacles to your financial planning
- Practice delayed gratification
- --our daughter taught me this one when she was 3
- Understand the difference between Needs & Wants
- Be clear on what your ultimate long-term financial goals are
- Keep focused on how your budget will help your family finances
- Implement strategies to succeed with your monthly budget plan
- Stuff can throw things off track--no worries, refocus & keep going
- Avoid at all cost a budget that puts you INTO debt every month
- Be real--don't live beyond your means
Do whatever will help you and your family stick with it.
We are practicing all these tips every month and have been doing it for a few years now and it can work really well, and the great thing is: we don't usually have more month left over than money anymore. It is a growing process, so we try to keep learning & improve each month we practice it.
Household Expenses Step #3: Running Your Home Expenses
The 70% remaining income directs many of our financial decisions for
running our home and taking care of all our household and family
expenses. Listing out all our yearly fixed and as accurate as possible
estimates of yearly variable expenses gives us a clear picture of what
we have to work with and what's our real living cost. I like to work
backwards for an even clearer month to month family finances household
picture. An expenses overview for each month lets me see payment plans,
automatic withdrawals and quarterly fees for insurances, accounts etc.
Separate lists of fixed expenses as well as workable monthly variable
costs for groceries, shopping, toiletries and transportation costs makes
our monthly cash-flow and needs analysis pretty easy to follow, even
planning expenses for certain months can get 'comfortable'. Food,
shelter, clothing and additional expenses can be itemized into monthly
On our journey together I will continue to post more content pages to
help and support you with goal directed finance & expenses decision
Debt Management Step #4: Good & Bad Debt
Debts, Debts, Debts. Bad debt can really stress you and your family
out. I really want to share with you ideas I have gathered and learned
from running our household, and from the many years that I have taught
Financial Mathematics as a sub topic in High School Math classes.
Can we as a family of 7 or you and your family live debt free?
Is it even possible with our family finances nowadays?
We need to look at 3 basic aspects of Debt:
Investments Step #5: How To Investment
1. Getting Into Debt
2. Having & Managing Debt
3. Getting Out Of Debt
I will also 'hold no punches' on the usefulness and the potential pitfalls of the fairly common practice of: Debt Consolidation
Hold on because I will share tips on getting out of debt fast and
staying debt free. We'll compare & connect our income statement,
assets & liabilities with good & bad debt.
Credit Card Debts--eliminate all your credit card debts for good!!
Debt Management Success will be in your grasp before you know it!
Our investments started with basic life insurance and some limited retirement savings. We are continuing to learn and develop our family finances & our financial intelligence to direct and build a stronger financial portfolio for our family. We want to start with an immediate high compound interest account that allows us flexibility to build up emergency cash equivalent to 1 full year's pay, continue building capital and further develop investments into paper assets, Real Estate and small businesses.
- Our ideal financial portfolio would be:
- Emergency cash fund of 1 full year pay
- Capital for paper asset trading
- Further capital for purchasing Real Estate investments
- Business owner and investor
- Investment accounts & self directed retirement funds
This is tough where we are at because of the lack of any capital for our family of 7, so it has been made clear that little by little helps to get things rolling to try and develop some investment capital that can bring in long term monthly returns. It's a process with an exciting learning curve.
I guess we need to hold on and just enjoy the ride.
Clarity of purpose, what you and your spouse really want for your family is in our opinion crucially important. We will keep adding information to share ideas and tips on developing a financial portfolio that is workable, realistic & progressive. We'll also share useful resources to help you & your family.
Distractions Step #6: Extras & Distractions
Extra income, expenses and distractions can pull you away from your ultimate financial family goals. Keep a mental filter on when it comes to the importance of activities, earnings and all of those other fully justifiable expenses. Every decision holds consequences--some good and some not.
- These can make or break all of your family finances and financial planning:
- Extra income--money gifts, earnings, rewards & win-falls.
- Using the 10% rules. No Thinking, Just Do!
- Vacations, trips, outings--always costs over budget
- Lessons, activities and special events--do we need all of them?
- Health, dental, doctor, hospitals--really hard to plan for financially
- Extra expenses--Maintenance,up-keep,repairs,DIY & hiring workers
- Purchases,coupons,rewards,points,online shopping--help or cost?
An accurate family household income statement can really help you understand exactly where you are financially as a family. This has been a great learning experience for us to learn about the balance between income, expenses and our family's REAL monthly Cash-flow. It's helped us connect the assets & liabilities on our balance sheet with the figures that show up on our income statement. Knowing this has really helped to empower us on taking active charge in improving our family finances.
Rest assured, family finances is easier than you think. We're here for you.
Goal Setting Step #7: Finances Future Planning
Finance goals are easier to write down according to the simple S.M.A.R.T. Goals approach, but they can often be very challenging for us. Do we really know where we want to be in 30 years? Regardless of how small of a step we take each day in the direction of our financial dreams and goals, it will always move us forward. It will always take us one step closer to achieving the goals we desire and it will strengthen our family finances.
- Ask yourself these questions, discuss & write them down in detail Today:
- Where do you see you and your family financially in 3 yrs?
- In 5 yrs? 10 yrs? 20 yrs? 30 yrs?
- Where do you really WANT to be financially in 3 yrs?
- In 5 yrs? 10 yrs? 20 yrs? 30 yrs?
Know 'WHY' you want to achieve something and write down the top 10 reasons WHY you want it. The 'How' will take care of itself. As you review and focus on what you really want to achieve with your family finances, your creative and imaginative mind will set up what you should be doing and how you should be thinking to move towards your written down goals.
To move towards our financial plans we need to develop motion, movement & momentum towards them. A single step in the right direction gets you closer to your success. We believe in you, You Can Do It!
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