The thought of being hit with a major negative event that could affect your finances, like a job loss, illness can keep anyone awake at night.
But the prospect of something troubling and beyond your control happening becomes less threatening if you are properly prepared. So, when you are faced with a major financial crisis, it’s important for everyone to contribute his or her quota. By involving the family in building a tighter budget, you’ll find it improves the overall financial well-being of the family. Your efforts are more likely to result in concrete, positive changes if everyone works together. For example, if one person is cutting back drastically and the other continues to spend money or denies there’s even a need to curb spending, any spending cuts will be for nothing. Here are some tips to help in facing the financial crisis at home.
Brainstorm ideas
Brainstorm together. Are there services, activities and non-essentials that your family is using that you could agree to cut back on, even for a while?
Save on utilities. Talk about ways to trim use of electricity, cable TV or other utilities is a great way to go. Brainstorm other ways to cut back. Ask for ideas on possible ways to lower phone and internet costs, too.
Eat great meals at home. While it is a great idea to eat out, remember that the average home-cooked meal costs half of what it will cost eating out.
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Get the conversation started
If money is tight, it can be tough to explain to children why you can’t buy them what they want or continue to give them what they’ve always had — whether it’s the name-brand cookies or cereal they love or their favourite designer label in clothing.
How can you communicate to your kids that the family needs to cut spending? Here are tips to get the conversation started:
Be honest, but appropriate. Telling a child “no” to a request to buy something without giving an explanation won’t help. But take care that you don’t place the burden of worry on your child.
Answer questions. Avoiding the conversation might lead a child to imagine that things are far worse than they are. If you’re worried about a job loss or are feeling burdened by debt, tell your kids — on their level — that you’re taking steps to improve the family finances, and encourage them to do what they can to help.
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Look for ways to earn extra cash
Everyone has something they can do to earn extra money, whether it’s selling possessions you no longer use, freelancing or even getting a second job. The money you earn from these activities may seem insignificant compared to what you earn at your primary job, but even small amounts of money can add up to something meaningful over time.
Teach by example
When you tell your child she can’t have a candy bar because it’s not in the budget, it’s confusing to her when she sees you stopping to buy a bottle of Bigi Cola every day. Take the lead and your child will follow.
Let them earn
If your child is old enough to get a job, encourage him or her to work to earn spending money.