24 October 2005

Home Finance Basics from Dad

Every Saturday evening for as long as I can remember, my parents have always sat down at the table and "done the books". When we were younger they closed the doors separating the kitchen from the loungeroom and whilst we watched TV, Dad sorted out his income for the week and allocated it to his various accounts - regular expenses, emergency fund, Christmas club, mortgage, etc.
This regular habit allowed them to control their finances and have relative peace of mind. As both were involved "doing the books", both knew where they stood financially.
Dad's current simple method of handling his finances is to gather his main bills and multiply them to get an annual amount and then he adds 10%. This is then divided into 52 weeks so he knows how much to put aside each week. If all goes well, there is enough excess in the calculations to end up with a bonus each year in his expenses budget.
Although Dad keeps telling me he isn't very well educated he has a good grasp of basic finances which I try to pass on to all those I assist. The key steps are:
- regular review of your finances (weekly is best),
- know what you are spending,
- put a regular amount aside each pay period, and
- cover all your expenses, repayments and savings before spending on "wants".

Pretty straight forward and simple to remember - I just add in Quicken to do the recording and reporting.

Update: Hello everyone from 4 Real Learning Forum! There are more finance and homeschool posts linked at the side. Fell free to visit often.

1 comment:

Jubilant said...

Nice tip. I think could make use of it.