Family is a core part of our lives, without which we would be lonely. You share special moments with them, they support you when you are down and they help you bounce back. The financial aspect of leading a successful life is another aspect you should not ignore. Although it isn’t the most essential aspect, it is certainly important. It provides basic necessities, luxuries, medical care, and much more. It is thus an important ingredient in living a fulfilling life. Nowadays, running a family cannot be solely the responsibility of one person; everyone has to share in the responsibility. The only way to achieve this is for the entire family to be aware of finances.

What is financial awareness?

Financial awareness is the ability to understand your personal finances and how to leverage them for your benefit. The basis of financial awareness is financial literacy, which is defined as the ability to understand and use information to effectively manage your personal financial resources.

Financially Aware Family

How can a family become financially aware? Families that want to be financially savvy need to know where their income comes from, how it is spent, and how it is invested. It’s important you and your partner understand each other’s sources of income, how household expenses are being managed, the savings that’s available to invest, any insurance policies and their details, and any other assets (property, cars, etc.) that’s available. Even if you are not a contributing family member, you will have to face financial decisions daily, for example, how much to spend on groceries and managing household expenses within a budget. In order to manage your family’s finances efficiently, you must be financially savvy.

Hazards of being financially unaware

Imagine yourself living in a bubble, unaware of how the world outside is and suddenly that bubble bursts and you are thrust into the open air without warning. Although you can cope with it, adjusting to a new environment will certainly take time. A fish out of water is in a similar situation to when you are ignorant of how the household’s finances are managed. During a time of crisis like illness, job loss, an accident or death of a loved one, you’ll find yourself in a financial bind. It will take you a considerable amount of time to become familiar with the financial situation. Don’t depend on others for financial assistance; be self-sufficient and educate your family and dependants about your family’s state of affairs.

Things to note to become financial aware

1. Income – Make yourself aware of where the money is coming from, salary, rentals, interest, etc.
2. Expenses – What are your expenses – daily household expenses, monthly bills, EMIs, school fees, wages to the employees, etc.
3. Savings/Investments – Make a list of investments that you and your family have made and how to liquidate them in case of any emergencies.
4. Loans – List down the loans, EMIs that you and your family are re-paying right now and make allowance to continue re-paying it in case any untoward situation arises.
5. Ownership of assets – Make it clear who is the owner of each asset you have and have a will in place so that there is no dispute that will arise in case of your demise.

A person’s earning capacity and time are both limited, and therefore the income they will earn is also limited. Make wise investments and spending decisions so that your money lasts until retirement. Engage your spouse in financial planning as well. The future is uncertain, but the present is certain. Don’t let them fall prey to financial wolves or get caught up in a storm in your absence. It’s all about equipping them with the knowledge, understanding, and awareness that can make a world of difference, when you are both looking at the rainbow through the same prism.