6 Best Finance Management Tips for Breadwinners

On paper, managing finances sounds easy. You make a budget of your income, and you spend according to

On paper, managing finances sounds easy. You make a budget of your income, and you spend according to your needs. However, as many people come to realize, staying on top of your finances is easier said than done. It is especially the case for family breadwinners.
As the term suggests, breadwinners refer to members of the family that act as providers. In most cases, it would be the parents earning money for their households, but the situation is more complex in Filipino families. In the Philippines, it is not uncommon for working family members to also provide for extended relatives (e.g. siblings and their families, grandparents, and other members of kin). For example, an overseas Filipino worker or OFW could be providing for at least two families back at home.

Breadwinners usually feel a significant amount of pressure to provide, even if they try to hide it from their families. If you are the breadwinner of your family, ensuring that your family is happy and well-provided for is generally your top priority. However, you may have your own aspirations as well. Whether it is building a comfortable retirement fund or visiting another country, these dreams are also well-worth working for.
That said, as mentioned earlier, managing finances is tough. You may feel like you never make enough money, no matter how hard you work. Fortunately, there are effective methods you can use to stay on top of your finances while making sure that your family is well-provided. With these tips, you can better plan for accommodating the needs of your dependents and working towards your personal financial goals at the same time.
Without further ado, here are some of the tips to keep in mind when overseeing your family’s finances.

Tip #1 – Track Where the Money Goes

Sometimes, breadwinners are treated like living ATMs, but that should not be the case. Providers also have the responsibility of ensuring that the funds go where they need to go, especially in emergencies. The first step to accomplishing that is figuring out how the family income is being spent.
Today, you have several money-tracking tools that you can use. Writing down expenses in a designated notebook is a traditional method, but it is still effective. The modern upgrade is downloading apps for managing finances, where you input your income and expenses to keep track of your spending. Additionally, digital wallets and mobile banking both have transaction histories, making it easier to track where and when the money goes.
However, effective financial management does not end with tracking family expenses. You also need to analyze the family’s spending habits. Are all of the expenses justified? Are there any areas where family members spent too much? Which expenses can you cut to save on costs?
By understanding the family’s spending habits and learning which areas are important to the family, you can design a suitable budget that will fit your family’s needs.

Tip #2 – Use the 50-30-20 Budget Method

One common piece of advice in managing money is to stay on budget. The question is, how do you create one that is both functional but also satisfactory to you and your family?
There are several ways to form a budget, but one of the most effective techniques is the 50-30-20 method. This percentage breakdown is simply a guide on how you should allocate your after-tax income. It states as follows:
● 50% for needs (E.g. rent, utility bills, food, school fees)
● 30% for wants (E.g. vacations, new gadgets, leisure activities)
● 20% for savings (E.g. general savings, emergency funds, insurance, investments)
Expectedly, this allocation method is not practical for all families, but it does give you a clear idea of how your monthly expenses should be broken down. In short, a significant portion should be set aside for necessities. After the necessities have been taken care of, the remaining funds are divided between wants and savings.
Depending on your financial goals, you may be tempted to allocate the rest of the funds to savings alone. However, people deserve a break or something nice once in a while, so do not take these leisurely wants for granted. Not only will it help foster bonding but it will also help keep your family members’ spirits up.

Tip #3 – Take Advantage of Different Payment Channels

The finance market is littered with various kinds of payment methods, including digital wallets, debit cards, credit cards, and of course, cash. People used to distrust online payment functions and portals, but today, Filipinos have become more accepting of them. Play your cards right, and you can save a significant amount of money and even acquire extra perks from using different payment channels.
For example, being a credit cardholder has a lot of benefits. It allows you to pay for large necessities over months instead of immediately (e.g. home appliances); gives you access to various perks like airline mileage points, discounts, promos, and cashback; and helps you build a good credit score for future loans. If you use a credit card wisely, you can maximize its benefits and put you one step closer to reaching your financial goals.
Another example is paying for your bills through online banking. Instead of taking time out of your day to go to a payment center and wait in line, you can conveniently pay your utility bills with your digital wallet or banking app. Moreover, you can set up an auto-payment arrangement, so you no longer have to worry about forgetting to pay your bills.

Tip #4 – Pay Yourself First

Another common piece of advice in financial management is to pay yourself first. To be clear, this does not mean treating yourself after receiving income; more accurately, it refers to treating your future self. Paying yourself first means that when you receive your salary, you immediately set aside the funds for your savings first before spending on anything else.
The savings category comprises several financial groups, including:
● Retirement Savings – When you are older, you will want to retire from working. Without a salary, you will need to rely on your savings to sustain your day-to-day needs. If you have a partner, take into account their daily living expenses as well so you will have enough savings for both of you when you retire.
● Investment – Idle money is lost money. Instead of letting your money sit in the bank, try to grow it by investing in stocks or mutual funds. If you are unfamiliar with this topic, do your due research and take advantage of the free information available to start a personal portfolio.
● Insurance – Life can always take a turn for the unexpected, and the last thing you want is to leave a financial burden on your family when something happens. Having a life or health insurance in place can significantly lessen your worries, knowing that you have something to count on in case of accidents and sudden expenses. Check out Robinsons Bank’s IPONsurance for an accessible insurance plan for yourself and your family.
● Emergency Funds – In case of unemployment, it is wise to have emergency funds in place. They usually come to a total of three to six months worth of living expenses and can significantly help the household stay afloat as you look for a new job.
Be smart about your income, and make sure to pay yourself first.

Tip #5 – Learn How to Say No

As the breadwinner, you may feel pressured to give in to your family and other dependents’ wishes and requests. After all, you care for them, and you wish to see them happy. It is a noble motivation, but remember, it should not come at the expense of your health nor pass your capabilities. Several providers work extra hard catering to other people’s desires, but this is not sustainable in the long run and may lead to physical and emotional burnouts.
Responsible financial management includes learning the ability to say no. It includes turning down requests or aid that go too far beyond your financial capacity and at the cost of your and your family’s welfare. This can be difficult to do in a culture that treasures the concept of family above all else, but it is a necessary step to take. You need to set proper boundaries.
These limits apply to yourself as well. Always giving in to your cravings or impulse buying are not healthy spending habits, so you need to learn how to say no to yourself as well. While small treats and rewards help boost motivation, they should not go beyond the allocated budget. Instead, find happiness in the little pleasures, like treating yourself to the food you like or purchasing a new article of clothing to use at work.

Tip #6 – Talk to Your Family about Finances

A well-formulated budget plan is useful, but it can only take you so far. Effective finance management is only truly possible if your family becomes involved. After all, you can try to save as much as you want, but it will not be fruitful if your dependents always go beyond the allotted funds. Hence, you need to have an open and well-meaning discussion with your family members about the household’s current financial situation.
Start by being honest about your income and the budget you have designed for the family. Explain the breakdown carefully and why they are important. Afterward, you can gently address some of the excessive spending habits that some members have. Use the data you gathered from the money tracker as evidence, if needed. The family members you addressed may feel indignant about it, but getting the family on board with the budget will significantly lessen your burden and help you progress toward your financial goals.

Conclusion: Effective Finance Management Takes Practice

Overall, it becomes clear that managing your finances wisely takes a lot of work, especially for breadwinners. However, it is work that significantly pays off in the long run. While adjusting to a new budget and changing spending habits can be difficult at first for your family, it does become easier over time. With enough practice and your family’s support, you can help ensure that your finances are in order not only today but also in the future.