Family finances

economic-dictionary

Family finances are the administration of assets and expenses of a person or family unit. This, in order to obtain the best possible result.

That is, family finances are a branch of economics that focuses on managing the inflows and outflows of money for an individual or household. While it is true that family finances, as the name suggests, refer more to a family. If we are more specific, we will talk about personal finances in the case of individuals. All in all, they could be used as very similar concepts.

Thus, what this discipline seeks is to define basic guidelines that allow people to achieve a better economic situation in the long term.

Family finances are closely related to daily habits. These many times generate expenses that accumulate over time and that we do not identify easily or at first glance.

Personal Finance Applications

There are many ways to apply family finances, such as the following:

  • Set savings goals, either as a household or for each individual in the group. This, even defining specific purposes such as raising a fund for the education of children in the future.
  • Follow basic guidelines in the use of financing products. For example, not using the credit card dividing the refund into installments. This, unless it is the acquisition of a long-lasting good such as a household appliance or a high-tech product.
  • Prepare the family budget, defining which are the priority expenses and conducting periodic reviews to verify if the goals are being met.
  • Parents must decide how they will teach their children the value of money, for example by instilling in them the habit of saving.
  • Maintain discipline in the management of financial obligations, avoiding over-indebtedness and excessive interest payments.

Importance of family finances

Family finances are important because they are closely related to financial education. Thus, it is important that parents teach their children how to handle their money, and that there is also a course on this subject in schools.

Fortunately, there is growing awareness of the importance of transmitting financial knowledge from an early age. That way, in adult life it will be easier, for example, when using financial products and budgeting.

Tags:  Business markets Colombia 

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