Well, who wouldn’t? We all know that starting a family is not easy, nor is it cheap. That’s why you need to maintain your household cashflow to keep the harmony within the family. You can start by creating a solid financial plan.

According to Aidil Akbar, a certified financial advisor, there are two essential strategies in managing your income. The first one is applying the 40 – 30 – 20 – 10 budgeting rule, while the second strategy is conducting a financial checkup.

40 – 30 – 20 – 10 budgeting rule

Those numbers represent the recommended budget percentages for each category. No more than 40 percent of your take-home pay should go to daily necessities, such as meal, transportation, bills, and entertainment.

Meanwhile, 30 percent of your income can be used to pay off any productive debt. Productive debt is using a loan to buy a property or any other assets that are likely to increase in value. Try not to spend any money from this budget for unproductive debt, like gadgets or other electronic products.

Save at least 20 percent for long-term financial goals. Financial goals can be varied, from child’s tuition, life insurance, to retirement fund. For the remaining 10 percent, put it toward an emergency fund that may come in handy on a rainy day.

Financial check-up

As the name implies, a financial check-up is an assessment of your finances based on several important parameters of cashflow management. Here’s a checklist to see if your financial future is heading in the right direction:

  • Your total assets worth more than your total debt
  • Your expenses do not exceed your income.
  • Your monthly installment payment is no more than 30 percent of your income. 
  • The minimum amount of your undisturbed savings account is three times of your monthly expenses.
  • All of your family members own health insurance. 

Ideally, both strategies can work together and complement one another. However, they won’t work without proper communication and cooperation. Before you get started, choose which cashflow management method suits your needs and financial situation.

Will the wife manage all the household expenses? Or will she be handling most of the financial responsibilities? As an alternative, you two can share the role equally and work together as a couple. Remember, healthy cashflow is vital to family happiness. So think carefully and choose wisely.