Money doesn’t, unfortunately, grow on trees. If you have a family, keeping your finances in check is essential and it can be difficult to know where and when to start. If you want to ensure your family finances are in order, take note of the following easy steps and tips.

Understand your income and expenses

You should first take a moment to understand the household income and expenses. The idea is to have a clear picture of how much money you have available each month and the breakdown of where the money is coming from. Furthermore, you should note which of this income is relatively secure (i.e. a permanent position with a three-month determination clause) and which of it can fluctuate more (for instance, rental income from a holiday home).

Once you have sorted out the income, it is time to start exploring your household expenses. Surprisingly large amounts of people don’t actually have a clue of the real spending per month and you ought to get out of this group. It’s a good idea to check your expenses at least every six months to keep an eye on whether you’re suddenly spending a lot more money on a specific activity.

When studying your expenses, divide your spending into smaller groups. You want to have the ‘essential’ spending and ‘non-essential’ spending separated. The essential spending would include things like mortgage, electricity, insurance, and phone tariffs. The non-essential should include things like entertainment and eat out.

If you notice your expenses are barely covered by the income, you have a problem and you need to start finding ways to cut spending.

Become a smarter spender

Instead of just paying for your utilities without thinking about it, start being a smarter spender. There can be huge differences in electricity prices or broadband costs. You should regularly check with price comparison sites and with the service providers directly whether you are getting the best possible deal. Dedicate one day every six months or once a year to check for prices and changing service providers if required.

In addition, when you are about to spend don’t just opt for the first thing you see. Compare prices online and take advantage of promo codes available from various sites. If you look around and research your shopping, you can cut your expenses. It’ll take a bit more time, but once you learn the tricks, your smarter shopping choices will become automatic.

Don’t be afraid to borrow, but don’t sit on debt for too long

Borrowing isn’t as bad as you might think. Indeed, it is often a necessary part of family finances. The key is to know when and where to borrow and to have a proper plan for paying off that debt.

Whenever you encounter a situation where borrowing seems like a good idea, consider your options. Do you have to borrow? If you do, what are the different options available to you? Ensure you understand the terms your lender is suggestion – the payback rate, interest rate, and repayment schedule are especially crucial to understand.

As soon as you borrow money or shop things on credit, create a repayment schedule. Understand that high-interest debt should always be paid off first and as soon as possible. Prioritize your debt, if you have a lot of it. Clear off the costliest debt first and then move on to the others. If you feel scared about your situation, consider checking out services like Financial Counselling.

Prepare for the future

You shouldn’t just focus on what’s happening right now. Unexpected events are all too common in a family – you’ve likely encountered a few broken appliances and out-of-the-blue birthday parties. You need to ensure you aren’t just able to pay the bills you have to today, but also cover unexpected costs without getting into debt.

Most financial experts recommend having at least three months worth of money in your savings account. This is for those big emergencies, for instance, if you’d lose your current job. The money should preferably be on a savings account, with a good interest rate, and a less flexible access. Make sure you first build up this buffer. If you have no savings, set aside around 10% of your income until you’ve covered the family expenses for three months. You can then continue to save, but by putting a little less on this account.

In addition to this, you want to have a bit of money available on an account that can be accessed at any time. This is for ‘smaller’ emergencies, like a broken car or the family holiday you want to have. For this, you’re looking to have a few thousand on the account.

Taking care of your family’s finances will require a bit of an effort on your part. If you spend a bit of time to get on top of it with the above tips, you’ll soon enjoy a more relaxed life. Financial health is often just about finding that balance and planning for the future.