Bayport Blog

How to improve your finances as a family

Financial stress is difficult enough to cope with under normal circumstances. The Covid-19 pandemic adds a layer of uncertainty that can make life feel very difficult for you and your family. Let’s look at practical tips and debt solutions to help you manage.

Money is one of the biggest sources of conflict in families, regardless of how much or how little we have. When things are ticking over reasonably well, it is easy enough to ignore the money irritations. However, when income levels suddenly drop (as has happened in many families over the past few months) or something else disturbs the financial balance, there is nowhere to hide. You have to take action and you have to do it now.

Here are some steps you and your family can implement today to relieve your financial stress.

1. Before you do anything, sit down and have an honest conversation. Every person under your roof, or who shares in your income and expenses, has to understand what the situation is. The purpose is not to scare people, but to get everybody’s support for what needs to be done. Common understanding helps to avoid conflict when you have to say no and gives family members the opportunity to contribute ideas.
2. Set financial goals. Agree on your family’s financial goals. You need to know what is important to every member of the family and create a plan to reach those goals. For example, as a parent, you might think your children want the latest online games, but when they have to choose, maybe going on holiday in December is more important.
3. Create a budget that works for your family. Your family’s budget has to reflect the financial goals you have agreed on. To create your budget, start with writing down how much you earn (remember to include all the money that comes in, including government grants). Next, list your monthly expenses. What bills do you have to pay, and what else do you spend your money on? Remember to put money aside for emergencies.
4. Track your expenses. Budgeting is one side of the money-management coin; expense tracking is the other side. Every member of the family has to track every cent they spend. You need this information to build an accurate picture of your spending. This will enable you to identify savings opportunities, cut costs, and adjust your budget to achieve your financial goals.
5. Clear debt. Focus on settling your debt as quickly as possible. Paying your bills on time saves you from being hit with penalties, and clearing debt as quickly as you can helps you spend less money on interest.
6. Look into debt consolidation. If you have multiple loans, debt consolidation could be the way to go. Compile your full debt picture and get in touch with a credit provider such as Bayport to discuss your debt consolidation options. If you can borrow money to pay off all your debts, leaving you with only one instalment for a loan with a lower interest rate, the benefits to your cash flow are significant. In addition, credit providers are often willing to negotiate a settlement discount in exchange for a full and early settlement of a loan. This will mean that the amount you borrow for your consolidation loan is less than the sum of all your outstanding debts. It is very important, however, to make absolutely sure that the consolidation loan does cost you less over its full term than what it would have cost you to just keep paying your original loans.
7. Educate yourself. Last but not least, keep learning more about money management and healthy money habits and teach your children too. Financial skills that develop and support your new money habits will keep you on track with your budget, help you avoid financial problems, and help you and your family to achieve your financial goals.

For more information on our debt consolidation offering, please visit https://www.bayportsa.com/products-services/debt-consolidation/