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10 Tips for Effective Financial Management for Your Family

Are you and your family looking for ways to save money? Dien May GREEN brings you 10 essential tips for effective financial management to help you reach your savings goals! Learn how to use your money wisely while still meeting basic needs.

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29 July, 2023

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Create a Budget for your Family

Developing a well-defined budget for your family is instrumental in efficiently managing monthly expenses. One popular approach is the JARS method, which involves allocating expenses into different categories based on predetermined percentages. This method utilizes six financial jars to optimize budget allocation.

Essential Expenses (55%): This category includes necessary expenses such as family meals, food, medicine, gas for transportation (car, car rental, etc.), and housing rent (if applicable).
Savings (10%).
Investment Expenses (10%): This category includes expenses incurred for acquiring additional knowledge through courses, books, documents, or investments with profitable business purposes.
Enjoyment Expenses (10%): This category includes expenses for short-term relaxation purposes, such as travel, watching movies, participating in exchange and entertainment activities, and more.
The cost of giving (5%): This refers to expenses incurred for outside activities such as charity work, community involvement, and similar endeavors.
Free Expenses (10%)

The expenses mentioned above may vary depending on each individual’s family situation. It is important to prioritize essential expenses, which are fixed, and to be flexible with other expenses. This allows for reasonable spending within the means of the family.

Use the 50:30:20 Rule to Help Balance Your Spending

Applying the 50:30:20 rule of spending can assist families in maintaining reasonable expenses without compromising essential needs. This rule suggests allocating 50% of income towards necessities, such as housing and food, 30% towards discretionary expenses, like entertainment and vacations, and 20% towards saving and debt repayment. By following this guideline, families can attain a healthy balance between meeting essential needs and enjoying some discretionary spending.

Allocate 50% of your monthly household income towards essential expenses like utility bills (electricity, water, internet, etc.), meals, transportation, and rent (if applicable).
Allocate 30% of the income to fulfill the personal spending requirements of each individual. This allocation covers various aspects including educational expenditures, clothing purchases, leisure activities, and travel expenses.
The remaining 20% of income is allocated for financial purposes, including business investment for profit, savings, and a reserve fund for urgent expenses.

Alternatively, households can also consider using the 50:50 rule to manage their expenses. This method is particularly useful for households with fewer expenses. Under this rule, the family’s monthly income is divided into two equal parts:

50% of income should be allocated to living expenses.
Remaining 50% of income: This portion is allocated to savings, specifically for common family goals.

Create a Realistic Savings Plan

Discover the step-by-step process of applying a practical savings plan using the Japanese Kakeibo method with Dien May XANH.

Step 1: Allocate your monthly income into four categories:

Part 1: Essential Expenses

Essential expenses include items such as food, medicine, utility bills, and transportation costs. These are necessary for daily living and should be prioritized in budgeting.
Part 2: Discretionary expenses include funds allocated for personal shopping, entertainment, socializing with friends, and similar activities.
Section 3: Investment Expenses for Future Goals
Investment expenses for future goals refer to funds allocated towards activities such as knowledge improvement courses, savings for children’s education, health check-ups, and more. These investments are made with the intention of securing a better and more prosperous future. By setting aside financial resources for these purposes, individuals can ensure that they are prepared for their long-term financial needs and goals. It is essential to consider these expenses as part of a comprehensive investment strategy to maximize financial potential and safeguard against unforeseen circumstances.
Part 4: Unexpected Expenses

Unexpected expenses can arise at any time and it’s important to be prepared. Whether it’s a car repair, wedding, or a new crib for your baby, these unexpected costs can quickly add up. It’s crucial to have a plan in place for handling these expenses in order to avoid financial strain. Consider setting up an emergency fund specifically for unexpected expenses or exploring options such as insurance coverage that can help mitigate the impact of these costs. By being proactive and prepared, you can better navigate these unexpected financial challenges.

Step 2: Assess Weekly Expenses

At the end of each week, take a moment to review your total expenses.

Consider whether these expenses are reasonable and align with your financial goals.

Calculate how much money is left over from your weekly budget and how much needs to be saved in order to reach your monthly savings goal.

This analysis will help you gain control over your expenses and make informed decisions for the upcoming week.

Discussing the Benefits of a Healthy Lifestyle with Family Members

Please take the time to engage in open discussions with your family members to gain a clear understanding of the necessary expenses. This includes expenses such as further education courses, acquiring essential equipment or purchasing a car. By doing so, you will be able to identify and prioritize which expenses need to be supplemented within your family’s budget.

In addition, our platform offers the convenience of clearly delineating financial responsibilities among family members. For instance, you can take charge of essential household expenses like meals, electricity, and internet bills, while entrusting your spouse with other financial commitments.

At the end of each month, the couple can convene for a comprehensive review of their expenditures, earnings, and overall financial status.

Pay Close Attention to the Costs of Developing a Website

Unexpected Expenses and Entertainment Activities

In our day-to-day lives, we often come across unforeseen expenses that may require our immediate attention. These can range from car repairs to purchasing gifts for special occasions like weddings and birthdays. Additionally, there are various entertainment activities and exchanges that add to our expenditures.

Being prepared for such unforeseen circumstances is crucial. Allocating funds for unexpected expenses allows us to tackle them promptly without causing any financial strain. By recognizing the need to budget for these expenses, we can ensure that our finances remain stable and our lifestyles uninterrupted.

Remember, unexpected expenses are a part of life, and being financially prepared is the key to a stress-free and comfortable existence. So, plan ahead and allocate funds for unexpected expenses and entertainment activities.

In the family budget, it is important to allocate a specific percentage of your monthly income for this category of expenses. This helps to effectively manage your finances.

Make Checking Your Credit Report a Part of Your Routine

If you choose to use a credit card, it is important to be attentive and review the payment terms. This will help you avoid accumulating bad debt and manage any other credit loans you may be utilizing.

There are several financial apps available to help you effectively manage your expenses. Two popular options are Money Manager Expense & Budget and Quick Money Recorder-Budget. These apps offer a range of features to assist you in tracking and budgeting your finances. They even provide suggestions for a reasonable spending plan. Take some time to explore the functions of these tools and select the one that best suits your needs.

Think Twice Before Spending Your Money During a Crisis

When shopping at the supermarket or mall, it is common for individuals to make impulsive purchases of unnecessary items. As such, it is important to exercise caution and thoughtfulness when it comes to spending.

Create a comprehensive shopping list before embarking on your shopping journey. By doing so, you will not only save time but also ensure that you purchase all the essential items and have control over your expenses.

In addition, it is recommended to apply the 24-hour shopping rule. This rule suggests taking 24 hours to consider a purchase before making a decision. By giving yourself this time, you can carefully evaluate whether an item is truly worth buying.

Start Saving Money As Soon As You Get Your Salary

Proper management of spending is crucial in achieving financial abundance, as the needs for expenditure may appear boundless. In order to ensure fiscal stability, it is recommended to embrace the habit of saving after receiving one’s salary.

Current Savings Packages

Savings Package 1

10% off your first purchase
Free shipping on orders over $50
Monthly discount codes sent to your email

Savings Package 2

20% off all purchases for 6 months
Free gift with every purchase
Exclusive access to new product launches

Demand savings deposit: refers to the funds in an account that continue to accrue interest without a specified term, even if you do not actively deposit or withdraw money from it. Typically, the highest interest rate for demand savings deposits is around 1% per annum.
Term Savings Deposit

Our Term Savings Deposit allows you to deposit your money for a duration of 1 month to 3 years, depending on your personal needs. This allows you to benefit from the highest interest rates available, in accordance with the regulations set by each bank.
Flexible deposit: It is a type of savings account that allows you to withdraw money at any time. However, a charge of interest will be applied to the remaining balance based on the bank’s policy.
Savings and Installments: This financial option allows individuals to save money in a flexible manner while still earning competitive interest rates. Under this scheme, customers receive monthly interest payments based on the bank’s provided regulations.
Floating Interest Savings Deposit

A floating interest savings deposit is a type of account that allows you to save money for a specific term and earn interest based on the state bank’s basic interest rate or current market trends. However, it is important to note that this type of savings deposit carries some risk, as your profits are dependent on the constantly fluctuating market conditions.

Establish a “Contingency” Fund for the Family

Creating a family emergency fund is crucial. This fund should generally comprise about 10% – 20% of your family’s monthly income. Having this financial safety net in place enables you to promptly address unexpected issues that may arise, preventing financial hardship and ensuring you can effectively overcome any challenges life throws your way.

Having access to this fund will alleviate any concerns regarding unexpected expenditures and provide a means to address pressing matters, ultimately facilitating a smoother workflow.

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Sources for reference and synthesis: US. Bureau of Labor Statistic, Moneysmart

With the information shared above, it is hoped that you have acquired ten additional valuable financial management tips for your family that should not be overlooked.