5 Money Management Tips for Working Families

Given their specialised training and experience working with figures, professional accountants and tax advisors are well-equipped to manage financial matters. But money management concerns are not just for highly trained professionals – individuals and families without experience in finance must also learn to stay on top of budgeting and cash flow issues. Fortunately, following proven, time-tested money management strategies leads to success for most families committed to staying financially fit.

If your household budget remains shaky, or cash flow problems occasionally arise at home, returning to basic money management principles may be all that’s needed to find solid ground. Use these tips to restore financial order and set the stage for ongoing budgeting success.

Categorise Expenses

Life’s fast pace often muddles your view of where your money goes. In order to establish workable household budgets, it is helpful to break your expenses into several categories. That way, you’ll be able to adjust the amount of money you devote to spending area. As you establish your main categories, start with major expenses, especially those that repeat each month.

Housing, for example, accounts for a large share of each month’s budget, so it stands in its own category. Include rent or mortgage payment amounts in your housing total, as well as the cost of repairs and other home-related expenses. If you include a dedicated insurance category in your budget, account for your home cover expenses there. Otherwise, include the cost of your premium when calculating housing expenses.

Food and drink, entertainment, travel and recreation, car costs and other spending areas round-out a well-crafted family budget template.

Track Spending

Once your ledger is broken into easily monitored categories, the next step is to track your actual spending in each area. As you account for cash flow, it helps to think of spending as “fixed” or “discretionary”. Fixed costs are those recurring expenses you’ll see again and again, like mortgage payments and money toward car loans. Discretionary buys, on the other hand, represent items you have greater flexibility paying for. Food, clothes, and leisure spending each fall into this category, furnishing room for some families to find savings.

Tracking spending for a few months sets a baseline to work from as you adjust your budget. In some cases, shifting spending from discretionary buys like entertainment and travel is all it takes to stay ahead of fixed costs.

Recognise Long and Short Term Goals

Effective money management accounts for short term spending, but it also addresses long term concerns. Daily spending, for example, makes-up a large share of most family budgets. By the time food is on the table and petrol in the tank, cash flow slows for many families. Yet major investments and big-ticket buys always loom ahead, requiring another level of long term financial planning. The key to staying solvent is working both short and long term goals into your money management approach.

Manage Debt

In addition to ongoing expenses, most families carry debt from past spending. Allowed to spiral out of control, the impacts of debt mismanagement can be crippling. Effectively administering store cards, credit cards and other debt is essential to long term financial health, so successful management includes a strategy for paying down balances and erasing outstanding obligations. In addition to revolving credit, managing debt includes car loans and mortgages, which should be kept affordable and carry the best possible terms.

Get Help When You Need It

Financial difficulties are commonplace, so there is help available for those needing it. If you are behind on important payments, or see a cash flow problem ahead, don’t be too proud to reach out for help. It is always better to face problems straight away, lest they grow beyond your control. Consult with creditors and lenders before you’re in arears, seeking payment modifications or extra time making payments. Outside assistance is also available from the Debt Advice Foundation and other national charities offering education and confidential support. Experts are sometimes able to reduce monthly payment amounts to affordable levels and stop creditors from taking enforcement action against you. When crisis strikes, you may also need help protecting assets, like your home and other property.

Keeping financial order requires discipline and a consistent approach to money management. These tips help lay the groundwork for financial success, by tracking the flow of money through your household. And when problems arise, these proven strategies protect your interests until cash flow improves.

Paul graduated in 2001 with a degree in Finance. Since then he has gone on to work for several of the UK's most well-known financial institutions.

An avid blogger and a huge football fan, Paul is here to guide you through the ins and outs of personal finance and perhaps save you some money in the process!

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