This article was created in partnership with Western Union.
You may feel it’s your duty to support your loved ones financially and emotionally. But if that support starts diminishing your ability to care for your own needs, it’s not selfish to reassess the situation. In fact, it’s wise and helps you avoid burnout.
Here are some tips on how to handle your finances prudently to provide family support while maintaining your own expenses.
1. Calculate your income and expenses
Just like adults should put on their oxygen mask before a child’s on a flight, you should be able to take care of your own security before you’re able to meet your loved ones’ needs. To do so, you need to closely examine your personal financial situation.
At least once a month, allocate 15 minutes to sit down and gather all of your bills and credit and debit card records. A spreadsheet can help you visualize and calculate your income and expenses. In the income column, add your salary or maybe the amount you’ve earned while freelancing. On the expenses tab, include rent, mortgage, utilities, family support, groceries, transportation costs and restaurant expenses.
Subtract your expenses from your income to determine if your current income levels will support all your expenses. If you don’t have enough money to pay it all, ask yourself if there are any purchases you can eliminate (like dining out) or additional streams of income you can pursue. When you make it a habit to constantly reassess your spreadsheet, you will start to notice problem areas more often and, as a result, learn to spend smartly.
2. Categorize your expenses
It will be easier to manage your income and expenses if you categorize and quantify where you spend your money. Wealth expert T. Harv Eker teaches his readers the “jars money management system.” With this system, you split your money into different categories, with a certain percentage of your income going to each type of expense:
- 55% goes to necessities, including rent, food and bills
- 10% goes to a long-term savings account
- 10% is allocated for fun and hobbies, like dining out
- 10% goes to education expenses
- 10% goes to investments like stocks, real estate properties or mutual funds
- 5% goes to charitable donations or providing family support
That last bucket is where you will determine how much family support you’re able to provide on a regular basis.
This system works for people on all income levels. It’s not the cash amount that matters, but the habit of allocating your money wisely.
3. Strengthen your financial security by growing assets
According to financial education author Robert Kiyosaki, it’s also important to identify your assets and liabilities. In essence, an asset is something that puts money in your pocket. In turn, a liability takes money out of your pocket. Your goal is to slowly grow your assets and diminish your liabilities.
Let’s look at an example. Say you bought an apartment on the outskirts of Moscow for 5 million rubles. Is this apartment an asset or a liability?
First, consider the expenses associated with the apartment, like mortgage payment, utilities and maintenance. Because of these expenses, the apartment seems like a liability because it costs you money to maintain it. But what if you don’t live in that particular home and rent it out? The apartment turns into an asset when the rental income of the apartment minus the expenses equals positive net income. In short, for you to turn the apartment into an asset, the rent the lessee pays to you should cover all the expenses.
4. Consider your money transfer options
Supporting family successfully starts with being proactive about your finances. Identify your income and expenses, categorize your expenses so you don’t spend more than you can and try to grow your assets to increase your income.
If you work abroad to support your family, every dollar matters, and money transfers can have additional financial implications. When transferring money to your loved ones overseas, you’ll need to add foreign transaction fees and exchange rates to your expenses. Consider an option like the Western Union® app for a secure, reliable, instant transfer.
Being someone’s rock is not easy. While you’ll need to make room in your budget on a regular basis, don’t forget to take care of yourself, too.