Parents With Money Trouble

Where do most children learn how to manage their money? It's not in school. It's not from friends and neighbors. Most children learn money management by watching their parents. However you handle your money can be sending important messages to your children. How do you tackle teaching financial literacy in the home if your own finances are a mess? Working with your children to provide them with the tools that they need to handle their financial future can feel uncomfortable, especially if your own finances are causing you stress. Money problems don't usually fix themselves and you're probably not going to win the lottery. The trick to solving money problems is to tackle them! It may be painful to do so but in the end you'll find your stress level will go down once you have a plan in place.

Where do you stand?

It helps to start with a little bit of research when tackling financial issues. What do your finances look like today? Start by pulling out your checkbook or look at some bank statements. When does money come into your life (income) and when does money leave your life (bills and other expenses)?

Next, start to fill in the other aspects of your spending life. What to you buy on a day-to-day basis? Tracking your spending will help you to determine this. For the next few weeks, write down every time that you spend money from latte to new computer. If you're sharing a budget with someone, have them track as well. Tracking your spending will help you to determine where your impulse purchases have gone. Small money purchases, such as a $3 cup of fancy coffee can add up to over $1000 in the course of a year if indulged in each day.

Next, determine your annual expenses. We all have expenses that sneak up on us once a year that we're not always prepared for. Some examples include taxes, insurance, vacations and holiday gift giving. Add up the cost of your annual expenses and divide them by 12. This is the amount on average you need to keep handy to avoid debt.

Put it together

All the information you've gathered will add up to your monthly budget. If you're spending more than you earn each month, you've just found the source of your money woes.

Can you cut back?

Take a look at the money spent that you've been tracking. Are there habits you can cut back on? Most out of pocket spending is decision based and can be categorized as a need or a want. Cutting back on wants may help bring your budget into balance.

Is it debt?

Have you been afraid to open the mail? Do you have a lot of credit card debt? Is your debt growing? If so, it's time to come up with an eradication plan.

How did you get the debt?

Analyzing where debt came from is the first step to keep it from happening again. When you did your budget, you may have found that you have been using credit cards to make up for a lack of income each month. In this case it's time to get the spending under control. In order to have financial success you must spend less than you earn.

Can you afford your debt?

After you've tracked your spending and put together your budget what do you do if you can't afford to pay your debts. If you've cut back all that you can and you don't have the option of earning more it's time to seek help. Depending on your debts, a credit counselor may be of help or you can contact one of our partner organizations to help.