Money and the Family: Creating Good Financial Habits

Everyone knows the importance of fiscal awareness, accountability and responsibility. These are the foundations of good budgeting practices, which can help one to save up for rainy days in the future.

When it comes to families, it is especially important to inculcate good financial habits in order to live comfortably within the income. Every family has its multiple needs, unique circumstances, and other things to be accommodated into the finances. 

Be it school fees, the occasional hospital bills, accommodation and food-related expenditures, mortgages, or pension funds, the needs come in various shapes and forms. It is very important to prioritize, and most crucially, have a working financial plan in order to successfully navigate around them.

Some Healthy Fiscal Habits to Adopt

The following are a few of our suggestions which you can inculcate in your lifestyle so that you can adopt good financial practices, and educate the younger generation as well.

Budgeting

Creating a budget is the building block of how you manage your finances. For this, one must understand the family finances, and the main issues and grounds of expenditure. This will help you to create a realistic budget.

The very use of the budget is to spend much less than you earn. The most common advice is to save 10% of your total income, but this might not be practical. This is when considering how many families walk the thin line across which the spending will go into debt.

A budget will help you stick to financial goals, and help segregate apt amounts of money for various activities. A budget does not mean cutting down; it means accounting for every penny spent.

Insurance

Understanding insurance is another important thing when it comes to family finances. Insurance must never be something you overlook, as it can come in handy in the worst circumstances.

Most insurances target material objects like cars, property, and other valuables. But if your family consists of dependents, life insurance and critical illness cover are incredibly vital for you. This is not anticipation, it is more about preparedness.

Do not be a scrooge while opting for insurances, and at the same time, a higher price does not mean a better policy. Read through each policy carefully, and choose the one which best suits your needs.

Financial Discussions

Sit with your whole family, including your children and engage in interesting financial discussions. This can include your financial plans, how you manage your income, balance out your expenditures, and handle interest rates and mortgages. 

This will set the tone for your children to become more financially curious, and in the process, aware. The discussions will not just help your children, but will also help you to identify what your family prioritizes. Not only that, collective wisdom and transparent advice will pave the way to spend and save wisely.

Teach Children Financial Literacy

Teach your little ones the importance of good money habits. It will help them shape their lives for the better, and they will always have you to thank for it! There is no right age to start; the younger, the better. You can start with the very basics. A good old piggy bank is enough to inculcate a strong sense of financial sense and responsibility in your child.

These days, children might not be properly able to gauge the concept of money, because it is more abstract than ever these days. Earlier, currency notes and checks were indicators of money, but now, cards and payment apps are taking over. This means that children don’t visualize money the same anymore.

So, take your child whenever you go out shopping. This will also indirectly teach them how money works, and how important it is to spend it wisely.

For older children, you can provide them with knowledge about more complex things, like how to write a check, how to start a bank account, how to use debit cards and credit cards, and the difference between them.

Final Thoughts

Do you practise any of these practices in your daily life? If not, adopt them at the earliest, and definitely see a huge improvement in your financial wellness.

Most importantly, it is important to train the children to adopt similar good habits and make them aware of the various financial procedures. Children absorb and inculcate most of their attitudes and beliefs about money from their parents. Thus, it is important that parents become ideal role models for them.

If you wish to familiarise your child with money and especially debit cards, you can check out Cashee, a Dubai based company that provides services like debit cards especially aimed at teenagers. This will teach them major financial responsibility, and make them better equipped to deal with financial matters in the future.