How Can a Family Improve Their Economics?

You can improve family finances by committing to eliminating waste.

In today's down economy, many have lost jobs or had work hours reduced dramatically. Others struggle to find work -- much less work that pays all the bills -- so taking a look at the family economy makes a lot of sense. Whether a family struggles to pay bills or seems to be doing well, there are ways to improve the financial picture and future of the family.

Instructions

1. List all expenses. The first step in improving a family's economic situation is to gather all bills, loans, mortgages and other expenses and debts. Often you don't even know the extent of the debt load until you put everything on the table in front of you. Don't leave anything out; include all credit cards, stores cards and school expenses for the children. Put together all your expenses for the year and divide by 12 in order to see the total amount of your monthly expenses.

2. List all income. Once you have listed all your expenses, list all sources of income. This includes full- and part-time as well as seasonable work. Make note of expected income for the next year. Be honest. If a source of income is not secure, take this into consideration.

3. Compare your income with your expenses. If there are more expenses than income, you have a serious problem. Look where your money goes and how much is wasted on unnecessary or convenience items. Begin to trim expenses.

4. Make a budget. To improve the economic situation for your family, you need to learn to live within your income. Create a budget with those expenses you absolutely must pay each month such as mortgage, utilities, transportation, insurance and food. Add in savings and donations to charity. Add in paying for your children's school meals and any allowance you've decided upon. Making a budget means going over every expense to eliminate everything that keeps you from living within your income. For example: transportation does not mean anything fancy. If your car debt weighs down your financial situation, sell the car and buy something you can afford. Rein in credit card spending. Call credit card companies to get the best interest rate possible to assist you in paying them off.

5. Pay off credit cards. To improve your family economic situation, commit to paying off all your credit cards, smallest amount to largest. Take the credit cards out of your wallet so you won't be tempted to use them. Stay out of online stores and do not watch the TV networks that entice with 24-7 products.

6. Commit to debt elimination. Commit to living within your means and income. Create lists of needs before shopping for groceries, clothes or other items and stay with the list. Do not use your buying power to bribe your children or to make yourself feel better when you feel down. If you set a reasonable goal of debt elimination and do everything you can to meet that goal, you can and will improve your family economics.

References

• Oprah.com: Oprah's Debt Diet Step 5: Create a Monthly Spending Plan
• Suze orman: Suze's Tools
• Get Out of Debt Now: Getting Out of Debt