Everyone has the opportunity and capacity to save. However, the problem is that most people do not know how. It could be due to the lack of discipline in handling money or savings just getting depleted easily. Or it can be a lack of accounting knowledge and bad budget management. If you really want to, one can come up with dozens of reasons why it is so hard to save.
Are you having a hard time controlling your finances? Do you keep your family in a survival mode? You are not alone! Many parents are finding it hard to control their finances and stretch their wallet these days more than ever. The key out of this is to start changing your perspectives about money and become more effective and responsible in handling your resources properly. Basically, reprogram your mindset!
Why You Should Conduct a Financial Analysis
Arranging a family financial analysis is very important to long term financial success. Imagine what your resources will be for tomorrow if you don’t start saving now. Not a nice picture is it?! Here are are five reasons why budgeting for your family is important:
A thorough financial analysis helps you…
- plan for the future
- become a smart consumer
- achieve financial targets
- control your expenses and manage your spending
- rise up during emergencies or unexpected occurrences.
How to Conduct a Financial Analysis
Here are some tips to conduct an effective family financial analysis. Take note that these guidelines would not work if you do not cooperate with one another. Self-discipline, teamwork, and perseverance are the secret. Are you ready?
- Create a Budget
The first question is how much money do you make? Second, how much do you spend? Many people are still trapped in debts and financial insufficiency due to the wrong formula or mindset they’ve been following ever since they got employed. If you use the formula: INCOME–EXPENSES = SAVINGS, then you are bound to find yourself with a ‘financial cavity’. This is the reason why people cannot save money, and are still trapped in the rat race. Rather, you must use this formula: INCOME–SAVINGS = EXPENSES. Keep enough money for your savings first. Then set aside money for your monthly bills such as electricity, water, internet, phone, house, car, etc; and other expenditures like personal items. The rest, add it to your savings. Follow this pattern and you are well on your way to generating savings.
- Set Financial Goals
When you’re struggling to pay your monthly billings, then you might think that saving is too far out of reach. Think of this: Whether you are an employee or businessman, you have to set goals to be successful. Without careful planning and setting these goals, your bottom line suffers. It is the same with your family finances. You need to set financial goals to ensure success. Your family deserves to be in a safe and and financially secure environment. Setting goals is an important step in protecting your family’s future.
- Get Out of Debt
Debt; a simple four-letter word but deadly. Many relationships have been ruined by debts. Have you experienced much obscurity when in debt? You can’t eat, sleep, and think?! The easiest way to get out of debt is to never borrow money at all. Live below your means as best as you can.
- Plan for Financial Emergencies
Establishing emergency funds aids you in building up savings for unexpected expenses. Different people have different opinions as to how much you should have saved: 3 months, 6 months, etc. You have to decide what works best for your family.
- Control Spending on Food
Is eating your weakness? Practice self-discipline in controlling your food expenses. When making a market list, prioritize first what the basic needs are. Schedule your family dine out night because eating out frequently can damage your budget. These constraints will help you get that food budget back under control.
- Travel and Vacation
Travel has always been associated with spending large amounts of money. Likewise, control and schedule your vacations for when you can afford them. If you discover your budget just won’t allow your family to travel, plan to stay somewhere else that keeps everyone close to home but still has room for day trips and fun activities. There is always a way to have fun on any budget.
By working through this financial analysis you can breathe light into your dark situation. Your family can start getting on track to a better, less stressful, and financially sound future. Start living on a budget that works for you and your family. Yes, you can do it!
So, have you ever conducted a financial analysis? What did you find?