5 Tips to Make Your Family Financially Savvy

Updated on: 22 Jan 2024 // 3 min read // Personal Loans
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Your family is most important thing in this whole wide world. That being said, it is essential that you do not put every whim and fancy of the members of your clan while burning a deep hole in your pocket. The key to robust financial health lies in striking an ideal balance between the two. Your savings are as significant as your spending, and your immediate expenses are imperative as the EMIs (Equated Monthly Instalments) you pay towards the long-term assets that you acquire. It is for this very reason that it is crucial that the members of your family gain an in-depth understanding of the below-mentioned tips.

1. Gain Financial Literacy

This is the first and the most fundamental step that your family must take to understand the various nuances pertaining to money. Financial literacy can be achieved by following some basic terms including but not limited to:

  • Net Income
  • Earnings before Interest
  • Tax
  • Assets
  • Liabilities
  • Expenses
  • Loans
  • EMIs
  • Savings
  • Fixed Deposit
  • Credit
  • Debit

Of course, some members will be too young to understand these terms, while some will be too old to grasp and retain everything. It is at this point when you need to step in and convey these terms in a way that can be comfortably understood by all your near and dear ones. This will help them analyse the family expenses and encourage them to work towards saving as much money.

2. Debt Consolidation

When the going gets tough, the best way to enjoy enhanced financial freedom is the consolidation of debts. In case, you are looking forward to reducing the burden of EMIs or interest; you can take a loan with a lower interest rate to pay off the other high-cost debts. In case you have already defaulted on one or more loans, or Credit Card payments, you can always look for Best Personal Loans Online for Bad Credit, towards this goal.

Once your family understands the importance of this aspect, they can help you consolidate your loans such that you are left with a single credit to take care of, instead of multiple. This will also help them analyse the need for cutting down their expenses, to help you repay the existing loans more efficiently.

3. Tread Carefully

It has been observed by financial experts that most people spend extraordinarily on the weekends to compensate for the work they put in during the other days of the week. This can quickly lead to increased Credit Card bills, and mounting interests, which can prove to be difficult to pay. It is essential that instead of uncontrolled spending on materialistic pleasures, you encourage your family to revel in rich experiences, such as fun games, movie nights, or long drives. Not only will you benefit from strengthened bonds, but will also enjoy increased savings and better financial health.

4. Set a Realistic Budget

Quite often families tend to exhaust their monthly budget well before the 30th, and then use their Credit Cards to pay for further expenses. This leads to a vicious circle of ever-increasing outstanding bills. Hence, it is critical that your family understands the value of setting a realistic budget which they can easily stick to. The key here is to check your overspendings, especially when it comes to buying everyday items like groceries, and consumer durables like mobile devices and other gadgets.

5. Make Big Purchases at the Right Time

More often than not, consumer durables, electronics, and even clothes go on sale, many times a year. It is best that you time these purchases during the sale season. This will help you save a significant amount of money, while also teaching your family the art of patience. As you might have already guessed, greater savings will ensure lower EMIs and a better credit score. Now that is what you call a win-win situation!

We hope that you now understand the measures that you need to take in a bid to make your family savvy with the nuances of financial discipline. Once you achieve this, it will become relatively easy for you to acquire some of the most significant credits such as Home Loans and Personal Loans.