It is popular knowledge that people are careful when it comes to spending – frugal even. Most people never discuss money with other family members than their spouse. This article will give you some tips on household financial management. Household financial management often come from two sources: income and spending. We are going to discuss on how to increase household income and decrease spending.
Table of Contents
PART A: How to Increase Household Income
Increasing household income simply means making sure extra money enters the family. Frankly, I have realized that, it is easier to increase spending capacity than it is to increase earning capacity. Human wants are unlimited, remember? Nonetheless, here are some steps your family can take to increase earnings:
1. Work out at home
If your job provides you with a gym plan and deducts your salary take home, you can opt out of that arrangement so that your take home salary is increased. Exercise on your own. Take long walks every day, Watch workout videos on Youtube at home and follow the routine. Over time, you can buy some work out equipment that the whole family can use.
Rent out a room
If you live in a large home and have extra rooms after your has settled in, you can consider renting out a room. You will find people especially, foreign students moving to the Netherlands and in need of housing. Make sure to do a thorough background check on whosoever you will be renting out your room to. It is more suitable for young starters with their first apartment.
Upcycle and sell
Instead of throwing out formerly important household items, consider upcycling and selling them out. That item you no longer consider valuable could be another person’s treasure. Items like a mobile phone, cars, wardrobe, refrigerators, furniture, gas cylinders and laptops among others can be sold. Upcycling can be done by painting the item, replacing the worn out part or changing the front look. You can sell upcycled items to friends, colleagues and neighbors, in the local markets and online. You can even sell by displaying the items right in front of your home. Make sure to state the exact reason for selling to the potential buyer.
Start a blog, vlog or website and monetize it
Do you know that you and your household can make extra income simply by sharing your journey on social media.? If you love to write, start a blog. If you love the camera, start a vlog, open an account on Instagram or Tiktok and share interesting tales and tips. Monetize your page as it grows bigger and it will begin to generate extra income.
We have looked at ways to increase household income. Now, let’s talk about how to decrease spending. This is important because, no matter how much income flows into the house, if you do not cut down on expenses, the end goal which is to manage money within the household, will be defeated.
PART B: How to Decrease Spending
Practice Targeted Spending
We care about money not because of the money itself, but because of the happiness that it brings us. For this reason, we cannot run away from buying the things we love because we need to save. Have a savings target and be intentional about hitting it. To have an objective is the most important thing when it comes to saving. While spontaneous buying maybe exciting, overtime, it begins to tell on the household money management.
For example, if I plan to buy my mother a present worth 500 USD, I would do targeted saving over a period of two months or more, depending on how much I intend to save monthly.
Identify where to save
Draw a weekly or monthly table and divide the spending into four categories:
a. Fixed expenses (e.g. house mortgage or rent and utilities, daycare fees)
b. Non-fixed but continuous expenses (e.g. food, clothes)
c. Incidental cost (e.g. your car breaks down or you need to change your tyre)
Save
Whether you are a salary earner or a business owner, you should map out some percentage of your earnings that you MUST save first before further planning on other expenditure. For example, if I earn 1000USD monthly, I can decide that I must save 20% of my earnings. This means that my monthly planning is based on the remaining 80%.
After you have done this, Step 3 above must be applied. My suggestion is to save on “others”. Cutting down on leisure expenses will largely reduce the household spending. However, the family can occassionally reward themselves for achieving a milestone or for doing nothing at all by having outdoor leisure. The money for this can come from the extra income made by selling upcycled items as discussed in Part A or, from the 20% initial savings.
You can sign in to all the fidelity cards and programs with discount, but I do not advise to go beyond three shops for one similar product. It is too much time and energy invested and saving is limited.
Work from home
The Covid-19 pandemic situation made many employers realise that employees can comfortably work from home. If your job allows you, you can suggest to your employer to let you work from home on some days. This is important especially if your job is far from your home and requires you to spend a significant amount of money on transportation. Working from home also allows you the opportunity to run other businesses alongside your main job.
Cook at home
The best tip when it comes to cooking is to cook at home! Cook family meals and stock up in the refrigerator. You would have saved up to 30% of your intended savings by doing this. There’s no research on this but, take my word for it. For planned dinners, festivals and events, get the family members to come together and cook. This offers you wider variety of food in larger quantity and at a reduced cost.
Buy Second Hand Items
In increasing income, I advised that you upcycle and sell unwanted household items. Now to decrease income, just as you sell, you can also buy upcycled second hand items from vendors and online stores. Can I be honest with you? You do need the new version of many household items. From refridgerator to gas cylinders and furnitures- you do not need to buy them brand new. A second hand version of these items can and will serve the exact same purpose as the new. However, be careful to buy from the right vendors so you do not buy fake or stolen items.
In summary, it is important to know that household expenses are unending. You may become overwhelmed after a period of time. Kids are likely to frustrate your effort to plan. Hospital visits which are unavoidable, can equally ruin your plans to decrease spending. Emergencies in the home can make a total mess of every effort you have put in over a period of time.
Consistency is key to sustaining your goals. Occassionally, you are allowed to falter and even forget to work with the laid down plans but immediately the set back is out of the way, kindly hurry back and pick up from where you left off.
If you ignore your plans for too long, coming back much later may be difficult.
I suggest you that as a reminder, you set alarms, mark on calendars or write in a book the plans you missed and those you have ahead. Your spouse, close relative, colleague, neighbour or even kid can be your accountability partner. An accountability partner in this regard, is someone that reminds you of your saving/ spending goals and someone you must relate your milestones and failures to.
I believe that if you follow the steps written out above, managing money within your household will become easier so much that you can feature more rewards in the form of leisure and outdoor entertainment without having to worry.
About Me
Hi, there. I am Lin. Together with my husband and two kids, we live in the beautiful Netherlands in Europe. I am dedicated to self-development, creating quality time for the whole family, and fully supporting kids with their potentials with all I have learned from engineering, MBA, and 10+ years of working experience in the energy sector.
