How to deal with a family that spends a lot of money
Personal finances might encompass the whole family. Whoever is part of the family, if you are in charge of the income and expenses, you must know how hard it can be to control everybody’s spending. However, it is possible to involve all of them so they can help with the household’s financial well-being.
Of course, when it comes to impulse buyers that have a credit card extension and use it without any self-control, probably you will have to take away the card from them or establish a limit. But this is could only be a part of the solution when you want them to understand the effort that takes earning that money and how it must be invested so they can join in the efficient management of it.
Openly discuss money
You shouldn’t disguise your financial situation: neither when you are starting a relationship nor when you are starting a family. You must speak with honesty about income, financial goals, and how you manage your money.
If you have children, it is important to talk about finance since a young age, so they understand how money moves and why it is important to have a purpose behind every purchase.
Work = effort = Money
If your children do not understand how money and work are linked, then they probably won’t assign a value to the effort it takes. That’s when they spend money without thinking about the price or let alone if they can afford it or not. Most likely, they will pick up the most expensive cereal brand at the supermarket because they don’t see money as something that belongs to them but rather that something that is just there.
An alternative to making them understand the dynamics of the job market is to encourage them to get a summer job (if they are teenagers). This way they will understand the effort it takes by sacrificing time to earn money that is needed to buy something that they need or want.
Selling what is no longer used
In case you see that among your families there are people who spend money without thinking about the cost per use , you have to emphasize that buying all that stuff means paying a price and first you must be able to afford it. If you have a teenage daughter who has tons of clothes because fast fashion allows this, make her notice how unnecessary is to have that many clothes.
You can ask everybody in your family to go through their stuff and see if there is anything they could sell because they no longer use it. Not only you will get some cash back from those old purchases but you can use this as an excuse to make them understand how all those useless products cost money.
The key to personal finance management is honesty when it comes to your economic situation and what you can afford or can’t. If the family understands how the money is managed within the family, it will be much easier to establish a budget that everybody could stick to.