Whether you are faced with a reduced income or have increased expenses, you may want to use a spending plan to help you pay your bills. If you have lost a job or are sick and cannot work, your income will be affected for more than a month. You may need to adjust your spending habits to maintain control of family finances over an extended period.
Many families try to hide financial problems from themselves or their family members. By not facing your financial problems, this can be very destructive to your family. It can cause worry and stress because there is financial uncertainty. Having the lack of cash may be worse than the financial problem itself. Look realistically at your situation and actively seek solutions to your problems, despite the discomfort.
Spending decisions affect the whole family, so it is important to talk to your family about the situation. Let the family members know the family needs to change its spending. Involve everyone in deciding spending priorities. When family members understand the tough choices that must be made, and have a voice in making the decisions, they will be more willing to accept the decisions.
When your family talks about what is most important, be sure to listen to what they say. Supporting your family can help you pull together as a family and get through these financial times.
Families who are faced with a reduced income can cut their spending. The first items to be eliminated or reduced are the non-essential items such as luxuries, vacations, eating out, and home furnishings. If the reduced income continues, many families reduce spending for basic needs including food, shelter, transportation and medical care.
Families also revise their spending plans (budgets). Most make a new spending plan that includes a revised plan for getting the bills paid.
Some families may think they can increase their income, but fewer families actually do increase their income or use more credit to manage finances.
Research shows that borrowing or using credit to pay bills often brings only temporary relief and can be more expensive in the long run. For families, who did increase their use of credit, the more they borrowed, the unhappier they were with their financial situation.
Families who quickly made changes in their spending habits were happier with how they were managing their finances. Families who didn’t make changes felt more out of control and more dissatisfied.