How to manage household finances is an important step that you should know, especially if you have a new family.
The reason is, financial problems are often separate problems that can cause polemics between couples.
So, for those of you who plan to manage your household finances to be more organized and focused, this article is the answer!
1. Causes of Financial Problems in Couples
Before we get into the discussion regarding how to manage household finances, it's a good idea to first identify the various factors that cause these financial problems to arise and become a polemic in itself. Some of the causes that are commonly found in every pair are as follows.
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1.1. Lack of Communication on Joint Financial Planning with Partners
Communication is often an obstacle and the root of various problems. Lack of communication and lack of openness to partners can make existing financial planning undirected.
1.2. Differences in Value and Views About Money
Everyone certainly has a different perspective on things, including the way they treat money and set priorities.
These differences can sometimes be a separate boomerang. Especially if each partner chooses to manage their own income.
1.3. Sudden Financial Difficulties
Financial problems can arise at any time and are often unexpected. The presence of an emergency fund is needed to minimize disruption to existing financial posts.
But unfortunately, not everyone realizes the importance of allocating some of their funds to an emergency fund.
As a result, when financial difficulties hit, they will tend to be confused or even in debt.
1.4. Issues of Trust and Transparency Between Couples
Apart from the lack of communication, another form of problem that also haunts the couple's finances is a lack of trust and financial transparency. Like hiding debts or expenses that your partner doesn't know about.
This can be fatal in the short term or long term. This is because the accumulated debt will boomerang in the future and will potentially not be repaid or even dig a hole to close the hole.
1.5. Extravagant Habits or Impulsive Spending of One or Both Partners
Lifestyle is the next problem that often causes problems. The reason is, lifestyle when you are single and when you have a family are two different things.
If your lifestyle is still the same as when you were single, you need to be aware of this. One of them is a lifestyle that likes to be extravagant and always prioritizes desires. This hedonistic lifestyle can drag you and your partner into endless financial difficulties.
2. The Importance of Carefully Managing Household Finances
Managing finances with your partner when you are married is very important. Here are some of the benefits that exist from how to manage household finances with your partner.
1. Building cooperation, trust, and openness in financial management, so that existing management can run more effectively.
2. Avoid incompatibility or differences of opinion about money that can cause conflict in relationships (avoiding miscommunication).
3. Achieve common financial goals in the short, medium, and long term. For example buying a house, children's education costs, and saving for retirement.
5. Increase awareness and control of spending, thus minimizing the possibility of debt and the occurrence of suspicion of a partner.
6. Building mutual trust and responsibility in managing family finances, so as to minimize suspicion of spouses
By managing finances with your partner, you can create a healthy and harmonious relationship in terms of finances and help you manage money more effectively, thus creating a more stable and happier life with your partner.
3. 11 Ways to Manage Household Finances the Right Way, A la BFI Finance
After knowing the various financial problems that exist, then you can fix the existing difficulties by applying the following 11 ways to manage household finances.
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3.1. Calculate All Income
The first way to manage household finances is to be open to your partner. The existence of open communication is able to create good cooperation in managing finances that are structured and realistic.
Being open is not easy, it takes adaptation to actually do it. However, as long as you and your partner are both willing to put in the effort, you will achieve not only financial stability but also complete household harmony and a maintained sense of trust.
You might also consider opening a joint bank account, which will allow the couple to manage finances together and monitor expenses and savings together.
3.2. Recognize Needs and Wants
Often we are caught in a situation where we unknowingly spend money on something we don't really need or in other terms hungry for eyes. This phenomenon can occur when you are unable to separate needs from wants.
Needs are basic things that must be met by someone for the sake of survival, such as food, clothing, health, and shelter.
Meanwhile, desire is something that is desired by someone, but not always needed to meet basic needs. Desires are generally subjective and influenced by personality, interests, and habits.
Tips for Distinguishing Between Needs and Wants:
- Take a moment to think and discuss with your partner what are the needs and wants, be it in the near, medium, or long term.
- Grouping desires into certain categories. This is done to make it easier for you and your partner to make wise decisions. For example, desires related to hobbies, career, family, finances, and so forth.
3.3. Create a Need Priority Scale
Priority scales are often taken for granted and most people don't mind if they just keep them in their heads. Even so, the priority scale must be recorded and arranged in such a way that all the needs and desires of you and your partner can be met.
Tips: write down all the needs and desires of you and your partner and then fulfill them based on the level of urgency.
3.4. Record Expenditure and Income of Financial Posts
The next step is to make records of expenses and income in financial posts. Apart from functioning to track all existing expenses, this record can be used as material for evaluation every month, so you can get closer to the financial goals you want to achieve.
Tips for Creating an Effective Fund Budget:
- Determine the Financial Goals to be Achieved
- Calculate Total Monthly Income and Expenses Together
- Make a List of Shared Needs and Wants
- Set a Budget Limit
To make it easier for you to implement it, you can use financial applications or programs that are now available on the Play Store and App Store.
3.5. Keep Debt Ratio Healthy at 30%
The proportion of debt or a healthy debt ratio is below 30% of monthly income. If the existing debt exceeds 30%, you and your partner must review the existing expenses and find a way out. Do you need additional income such as passive income and so on.
3.6. Prepare Savings Funds, Emergency Funds, and Investments
In addition to the five things previously mentioned, you and your partner must prepare a savings fund, emergency fund, and investment.
The three types of savings above are intended to maintain financial stability, as well as slowly achieve financial freedom.
For an emergency fund, you and your partner can provide 9 times the total expenses per month. This amount can change if you and your partner already have children. For those who are married and have children, an emergency fund that should be prepared is 12 times the monthly expenditure.
Apart from emergency funds, investing is also worth considering. With an old life investment, you and your partner can be more secure. If you are confused about how to manage your finances, you can consider hiring a professional financial consultant, who can provide advice and guidance on investment and financial management.
3.7. Frugal Living
Frugality is a proper and effective way of managing household finances. By being frugal, some of the existing financial problems can be resolved. For example, paying off existing debts, preparing an emergency fund, and so on.
3.8. Limit Credit Card Use
Credit cards can indeed be a financial solution if used as wisely as possible. But unfortunately, not a few people still have difficulty controlling their egos. As a result, instead of making a profit, there is a stump. Credit bills are piling up and giving me a headache.
If you still find it difficult to control yourself and distinguish between what you want and what you need, you should start from now on by limiting the use of credit cards.
3.9. Use Promos, Discounts, and Cashback When Shopping
The presence of promos, discounts, and cashback will really help you and your partner to save on expenses and reduce the existing budget. There's nothing wrong if you and your partner often follow the latest news regarding promotions that are often offered by marketplaces, shops, and the like.
3.10. Find Additional Income
How manage household finances is not easy and requires patience and a strong will from yourself and your partner. When the existing income cannot cover monthly needs, there is nothing wrong with looking for additional income.
One alternative option that you can make to collect these funds quickly is to seek additional income. For example, starting a freelance, opening a jastip, becoming a reseller, drop shipper, and starting your own business.
So, if you are interested in starting a business but are still confused about getting capital, you can apply for financing from BFI Finance. The process is quick and easy, it doesn't take long.
3.11. Perform Periodic Evaluation
Finally and no less important in how to manage household finances is to periodically evaluate all the methods that you have implemented. Have a discussion with your partner and try to minimize the mistakes for the following month.
Friends of BFI, This is a review regarding 11 ways to manage household finances effectively with your partner. Hopefully, with this article, you and your partner can achieve shared financial goals and build trust and harmonious relationships.