At worst, a couple’s finances can be strained by financial stress. Money problems are common throughout your life, and these difficulties can pop up unexpectedly, such as if you have been fired from your job, have suddenly accrued major medical costs, or are not receiving enough money to cover your living expenses.
Is your immediate family in financial trouble? Or perhaps an extended family member having a financial hardship?
You may be able to do some things to help yourself or help others if you do.
Let us look at what family financial difficulties are, why they arise, and what you can do about them. In addition, we have helpful tips for assisting other family members as well.
What are family financial problems?
When your relative is facing financial hardships, the entire family and even extended family can be affected.
A family financial burden is when a family faces an overwhelming number of financial obligations that makes it difficult for all of the family members to obtain the necessities of life, such as paying rent, grocery shopping, and setting aside funds for retirement.
Financial issues may arise in families for many reasons, such as financial difficulties caused by a wider economic downturn.
A recession can cause devastating effects for families and individuals, leading to the loss of jobs, vehicles, homes, retirement investments, savings, and other assets.
What causes financial problems in families?
Many obstacles face families when they have financial troubles. Problems may be caused by outside forces, such as an economic downturn, but they can also be due to a lack of financial management skills.
These are some of the most common reasons for financial hardship in families:
The average debt burden of Americans is about six figures. From credit card bills to student loans, financial debt can be crippling. It seems like every additional penny is going into your loans. They aren’t decreasing fast enough, however.
This is especially true if a patient’s family has a high-interest-rate balance, such as credit cards.
Job loss is one of the top causes of financial hardship in families. Job loss may be sudden and traumatic. This can worsen emotional distress and lead to strained relationships with family members and friends.
In addition to the financial cost of having no money and having to use the family checking account to pay for the bills, there is also a great inconvenience.
Health care costs
While medical costs vary by state, insurance can average $400 or more a month.
And without insurance, the costs can be astronomical if a family member becomes sick.
Lack of money
Sometimes you work so many hours that you don’t have enough money to buy the groceries you need. You could be too busy to earn as much as you’d like to or perhaps are not making enough money to cover all your expenses.
The lack of money can lead to many family financial problems. To learn more about the causes of financial problems, click here.
7 Ways to navigate family financial problems
Financial problems in families are difficult. Perhaps you are having trouble because of your finances. The children do not understand why you cannot afford to go on a vacation or buy a toy they desire.
No matter what reason you have for financial difficulty, there are effective ways to improve your funds. Here are seven top strategies:
1. Have a financial family discussion
Sit down with your loved ones and discuss the economic issues you are currently facing. It can be difficult to have family finances discussions, but it’s essential that everybody involved in the process agrees with the course of action necessary to restore your financial standing.
You can discuss ways to save money or turn it into a game with the kids.
Although this is a stressful time, you can still make it into a fun activity. Prepare some snacks and have a game night afterward so you can relax and have fun together.
2. Get frugal
The next step to easing financial difficulties in your family is to learn how to be a better shopper. You might be surprised at just how much money you can save by learning how to shop efficiently and eliminating unnecessary expenses.
By shopping in generic brands and using coupons, you can save a significant amount of cash on your food bill. Going out less and exploring free activities at home can also save you money. You can also save plenty of money on your monthly cable by switching to a less expensive package.
Being frugal can be very helpful if you are in financial straits.
2. Create a budget
The best way to ensure that you and your family have financial security is to have a cash budget. Budgeting lets you know how much money is coming in and how much is going out again.
It helps you evaluate your extra income and expenses to see if you can adequately cover your basic needs. It gives perspective to your life.
The key is to keep a budget that is easy to stick to. Finding an affordable budget ahead of time prevents future financial headaches!
3. Boost your income
The best way to help your family’s financial worries is to increase your income. You can start a side hustle, take on a part-time job, or ask your employer for a raise if you are due one.
A side job is a great way to increase your income because it can earn you hundreds or even thousands of dollars a month. Some examples of high-paying side gigs are freelance writing, virtual assisting, and wedding photography.
Be sure to find something you like doing so you don’t become burned out.
4. Price compare everything
It’s easy to just purchase something and forget about it, but you can save lots of money by comparing the prices of everything, including insurance, prescriptions, and more.
For example, you can lower your insurance costs by requesting estimates from different companies and comparing them. If you can lower your premiums by $50 per month, you would save $600 per year.
Be sure to compare prices for anything you purchase or services you use to save money.
5. Call your creditors
If you are experiencing severe money problems, contact your creditors to set up a payment plan that will not increase your debt. This will prevent them from going through collections and will let your creditors know you are working to pay off your debt.
If you need assistance with your mortgage, this is important. You may be offered a temporary solution, such as a mortgage forbearance, so you will have time to get your finances in order.
Be sure to reach out for help if you have a medical bill or utility bill.
6. Find programs and resources to help
If your financial situation is preventing you from obtaining the medical treatment you need, then look into programs and resources that can provide you aid. For example, rental assistance or welfare services like food stamps.
There are numerous local, state, and federal programs to help you with your recovery.
7. Build an emergency fund
The key to avoiding financial burdens in the future is to build an emergency savings fund. This fund is for unexpected expenses and costs. For example, if your car were to break down or you lost your job, you could become homeless.
Having an emergency budget will prevent you from getting into trouble financially if you face an unplanned expense. It is a good idea to have three to six months’ worth of expenses saved in an emergency fund. You can start with a goal of $1,000 and then work your way up from there.
Now that we discussed how to take care of your immediate family’s financial difficulties, let’s talk about how to help a friend if they need it.
5 Ways to help out an extended family member with financial problems
Maybe you have your finances in order but a loved one needs some help. If you have an older family member facing difficulties, there are several ways that you can help them.
The following five pointers can help you help a loved one.
1. Gift cash
You may be able to give them money if the problem is having limited cash flow. Determine how much money you can spare to give them without causing yourself financial difficulty.
You can give them whatever they can afford or give them smaller gifts as often as possible while they get on their feet again.
2. Help create a budget
For family members who are struggling to make ends meet, you can offer to help them make a budget. There are numerous budget methods to choose from and there will be one that works best for them.
Sit down with them and make a list of all their income and expenses. Then figure out where they can save money.
Perhaps their financial problems can be solved by living frugally for a little while. Or perhaps they could use a cash envelope system to make sure they don’t overspend.
3. Co-sign a loan or take out a loan
Another way to help family members manage their finances is to take out a personal or co-signed loan. This could help a loved one with a low credit score who needs help while waiting to get a loan to repair their financial situation.
If you select this option, be certain that the terms of the repayment plan are clearly stated. You must also understand the financial and legal implications of signing a loan.
Signing the contract makes you legally obligated to pay the loan if the other party cannot, and this could impact your credit rating. It’s critical that you make your payments without causing undue financial stress.
4. Provide employment
You could rather not donate money or take out a loan for your loved one, but work them for an agreed-upon pay if you would rather not give them money. You could be of assistance around the house by doing yard work, running errands for your employer, or taking care of your own business.
Treat them as you would a staff member and clearly express what you expect of them, how much you will pay them, and when you expect the work to be completed.
This is an excellent option if you are short on cash and have several items that you have been putting off doing. Doing so will help your relative earn some extra cash.
5. Help in non-cash ways
If you want to provide money but don’t want to, there are other ways to help that do not involve money. You could babysit while they are going through job interviews or shop at the grocery store so that they have food to eat.
You can also give them gift certificates to certain locations. This gives you more control regarding how your funds is spent.
You can navigate family financial problems!
Financial difficulties are not always simple to resolve. This could be due to a variety of factors, such as losing a job or accumulating a lot of debt. The program causes you a lot of stress.
However, with these recommendations, you can save money and avert future financial problems!
If you want to assist your loved ones financially, you can buy groceries for them, connect them with local resources, give them money, or even co-sign a loan with them.
Whether you yourself are facing financial difficulty or have a family member who is, you can navigate through the situation efficiently!