Family Financial Management Essay
If you and your family are facing financial problems, you understand how easy it can be to fall behind on your finances. In many cases a financial issue is just temporary caused by an unforeseen bill or temporary lay-off, but losing one paycheck can have a ripple effect on your monthly budget and bills. Knowing how to get yourself back on track after a financial downfall will help you regain financial power and peace of mind.
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Most family financial problems are not something that happens overnight. It is generally caused by something that is impacting the amount of money coming into the home. Credit cards allow many people to live above their means and when the high balances arrive in the mail at the end of the month, many people can only afford minimal payments. This causes a high debt load that can last for years. Having an adjustable rate mortgage can fluctuate mortgage payments causing many homeowners to fall behind. Missing a payment or two on your automobile can also cause you to accrue late fees and face repossession.
As if being behind on credit cards, auto loans and your house payment isn’t bad enough, having financial difficulties can have a ripple effect that can last years. Carrying a high debt load and being late on a few payments can directly impact your credit report and FICO score, notes My FICO. This score pulls information from all three credit bureaus —Transunion, Equifax and Experian. Information includes late charges, amount of debt, age of debt and how many open or closed accounts you may have. If you face serious financial problems you may not be able to qualify for a new loan, refinance, mortgage or car insurance. It may also be hard for you to find a job as a result of a poor credit history. Creditors can sue you resulting in judgments against you and you may also lose home through foreclosure.
One of the biggest causes of financial problems is job loss. Whether it’s permanent unemployment or just a temporary job loss, if the amount of money you bring in is less than what you are used to you can easily fall behind. Maybe you have had an illness that has caused you to lose time from work or be unable to work in the future; this can cause you to experience financial issues and mounting medical bills. In some cases, poor spending habits, gambling, substance abuse problems or mismanagement of funds can cause you to rack up credit card bills and not pay your bills on time.
If you are experiencing sudden financial problems, don’t hesitate to get help. The Federal Trade Commission states that you should develop a budget within your means. Stick to your budget and allow yourself to pay down debt, save money and get caught up on your basic bills. If you are behind on revolving credit accounts including your auto and your home, contact your lender immediately and ask for a payment extension or payment plan, this may help avoid foreclosure, court action or repossession.
When you experience financial problems, you want to make sure you can get your debt under control. Being able to pay your bills on time helps relieve stress and allows you to regain a sense of stability and security for your family. The FDIC reminds consumers to be practical with their spending and set limits. Review your spending and set goals for your financial future.
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Many things can place a strain on the family bonds. Health concerns, psychological disorders, disciplinary issues with the children, and financial problems are some obstacles can affect any family. Financial problems can have many causes, and produce disastrous results when not handled promptly and properly. Families can take several steps to try to avoid problems or dig their way out of them.
Use a budget to avoid money problems
A 2009 Gallup poll lists lack of money, excess debt, the cost of owning or renting a home, job loss and healthcare cost as the most important financial problems families face. Families to worry more about basic economic problems than they do about specific concerns, such as the high gas and oil prices, or taxes.
Many families experience financial problems because they don't have good money management skills and make unwise decisions about how to use income and credit. Uncontrollable factors such as unemployment can add to families' financial problems. Lack of communication can cause problems when shopping gets out of control. Other causes of family financial problems include addiction, emotional problems and stress that lead to irrational spending patterns.
Family financial problems can lead to stress. Some couples fight over spending habits instead of searching for solutions to their money-related issues. Sometimes disagreements over money become so severe that they lead to divorce. Children may feel caught in the middle of the arguments, and feel guilt when they benefit from purchases, or disappointment when money problems prevent them from having certain things.
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because the financial problems affect the whole family, have a meeting to explain the financial issue and make a plan to solve it. Create a budget to eliminate debt and save money. Implement good record keeping practices, then establish priorities and stick to them. Viewing last 6 months bank statements, monthly bills, and monthly income information will help determine the family's budget needs. Family heads can work to create a budget to eliminate debt and save money. Then, implement good record keeping practices and establish priorities and stick to them. If credit issues are out of control, contact creditors to make manageable payment arrangements or seek professional help through Consumer Credit Counseling.
Create a safety net
Families should have a savings account with 6 months worth of living expenses in case of sudden job loss or other unforeseen circumstances. Don't be tempted to live off your credit cards in an emergency.