All On Black: How To Keep The Family Finances Out Of The Red

Sure, everyone could work a little bit harder and earn more money. But, there are only twenty-four hours in the day, and we all need a break. Anyway, a monthly wage only goes so far, even when you combine two together. The truth is that the average family doesn’t have enough disposable income, and that’s when the finances take a turn for the worse. When this happens, the bank balance can sink into the red and leave a family in a vulnerable state.

Does this scenario send shivers down your spine? For most people, this is a realistic possibility that hits home hard. But, this doesn’t have to be your reality. The welcome news is that families can keep their finances in the black if they follow the right rules. As such, below are the best ways to avoid gambling with your family’s future.

Budget & Spend Less Than You Earn

A lot of people don’t live within their means, which is to say they spend more than they earn. Regarding your finances, this is the most common mistakes anyone can make. For obvious reasons, this tactic is going to result in debt after a short while. When that happens, the interest rates and repayment plans will wipe out any money that you have left. To begin with, a budget is vital to prevent you from spending too much money in the first place. Why? It’s because it is simple to consult a budget and see whether a purchase is necessary or not. Also, when creating the plan, it compels you to take a look at your finances and review every purchase. This gives you a better understanding of your wealth and what you can and cannot afford.

Keep On Top Of Promotions

Although the advice above seems like something Captain Obvious would say, it isn’t due to lines of credit. Nowadays, it is not rare for a family to have an array or credit cards and loans at their disposal. Although they are beneficial in the right hands, they are also dangerous because it is hard to keep up with the terms and conditions. After all, card companies and banks have different conditions for different customers. Therefore, it is your duty to understand when the promotions are coming to an end, and when it’s time to pay up. Your credit card, for instance, might have an introductory 0% APR for twelve months. But, when the year is over, the interest will skyrocket. If you don’t pay back the money or transfer the balance before then, the interest will destroy your finances.

Don’t Buy Things You Can’t Afford

Again, this is a seemingly obvious statement, but it isn’t when you delve deeper. Promotions don’t only exist with credit cards and loans because manufacturers have them too. Samsung might have one on their latest phone, whereas Sony might stick one on a new television. The rationale for a deal is to get you to make purchases that you would not normally. After all, people won’t spend money if they know they don’t have it in their account. The trouble with a discount is that it puts off payments for weeks or months. Now, this is fine as long as you can afford it when the payment is due. It isn’t fine, though, if you can’t make the payment. Regardless of how good the deal appears, always think it through first.

Take A Breath

Another sales tactic that companies use is to push through a deal as quickly as possible. They know that shoppers like to um and ah when it comes to spending money and their indecisiveness can stop a deal dead. As such, it isn’t uncommon for them to pressure you into a deal. Whatever you do, don’t sign on the dotted line just yet. Instead, take a breath and think it through before you commit. Asking questions like ‘can I afford this?’ or ‘is it necessary?’ is a great way to gain perspective. Indeed, simply leaving the store and going back again the next day will provide clarity. After all, sometimes sleeping on it is the only way to work out whether a purchase is a good idea.

Get A Good Savings Account

If you are one of the lucky ones, you could have access money in your current account. Now, while this makes your bank balance look healthy, it doesn’t do much for your finances. The simple fact is that this money is stagnating in an account which offers zero financial incentives. The alternative is to open a savings account that accrues a higher rate of interest. Then, your savings balance will increase while it’s sitting there doing nothing. Of course, this depends on the type of institution you go with because they are different. But, as long as you choose wisely, there should be no reason why an additional account can’t make more.

Make An Investment

People shiver at the word because investments have negative connotations. Indeed, there are lots of ordinary individuals who have lost out because of a bad investment. Plus, they have a stigma which makes people believe they are only for experts. Well, the truth is that not every opportunity will fail, and you don’t have to be Warren Buffett to succeed. Sure, there is risk involved in putting money into a new condo launch or the stock market. But, there is also a lot of rewards as long as you follow the necessary steps. For instance, it is always savvy to opt for a project within your wheelhouse. Then, there is a certain amount of expertise to fall back on should problems occur. Or, you can generalize and go with an area that is beginner-friendly, such as real estate. Let’s face it, renting out an apartment isn’t rocket science even if you are an amateur.

Pool Finances

The odds are high that two adults who have a family are in the relationship for the long haul. Still, some people have been together for years who don’t merge their finances. If you are one such couple, it is a major error. Quite simply, pooling your money means a larger pot to afford the basics in life. That way, it becomes less of an issue. Plus, using two sets of funds is better than using one if both are strong. For example, a mortgage will be cheaper for two people who have a good credit rating. Yes, you take on their debts, but you also take on their earning potential. For a family, that is a big deal if you are trying to stay in the black.

Stay Monogamous

The main issue with a joint bank account is infidelity. Sadly, people cheat on their loved ones when it comes to finances. Some do it on purpose, and others don’t realize, yet it happens all the time. Picture the scene. You are out alone, and see something you like. It’s expensive, but the moment pulls you in and you buy it regardless. This might not seem like a big deal, but it is in financial terms for a number of reasons. The first is that every little helps when it comes to avoiding debt. If you are making expensive purchases without consent, it takes a big chunk out of the budget. More importantly, communication is the key to healthy finances. You might see it as a one off, but your partner might go out and do the same thing.
Before long, the shackles loosen and you both buy things without even thinking. It’s a slippery slope.

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