Running a home requires teamwork. Be it the chores, taking care of kids, or footing the bills, each member has a role to play in order to get things done. That’s how you ensure that your home runs smoothly and chaos isn’t second nature to the place.
And a big part of that is how you manage finances. The importance of money management isn’t just corporate lingo. It’s equally important at home and it can be a deciding factor in how relaxed or strained your relationship can get. Healthy finances are like a cushion for any relationship to handle other issues.
But there’s the question of who handles these finances better? Is the husband or the wife? Who knows what the house needs, how much to save? And when to break the piggy bank on a rainy day?
Before we answer who manages finances better, ask yourself these questions.
- Are you more aware of the monthly expenses or is it your partner?
- Who looks for bargains, deals, and coupons to shop for the day-to-day groceries?
- Who has a better bank balance?
Keep the answers in mind, and read on.
Household Saving Patterns
According to a survey, men are more confident while investing money than women. They have a more informed opinion in various investment instruments and would like to invest the money so that the returns are high and the risk is low.
Women, on the other hand, are more risk-averse. They try and stick to the traditional low-risk low returns instruments like bank accounts. A local report states that Singaporean women leave more part of their CPF untouched than men, thereby accruing a better rate of interest and making a better financial decision.
When it comes to big expenses like a house in Singapore, chances are high that both the partners take a mortgage. It’s the same case with cars. However, the choice of car would differ between the couple and women end up owning more ‘practical’ cars with less running costs than men.
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Watching spendings is as important as ensuring that you save enough. It’s an integral part of personal money management. When it comes to who manages finances better, empirical evidence suggests that women spend a greater percentage of their earnings on daily expenses whereas men tend to spend sporadically, saving the rest. Both of them end up spending equally on children’s education and enrichment activities.
However, in addition to spending, a lot of households nowadays lose money due to ill-managed credit card debts. In a survey conducted in the USA, 42 per cent of women made just the minimum payment as against 38 per cent of men. And 92 per cent of women had paid a late fee at one point or as opposed to only 23 per cent of men. That said, men are more likely to use cash advances than women.
Taking into consideration the saving and the spending patterns, women are better at budgeting the monthly household finances than men. A recent article suggests this because women are better at planning expenses whereas men end up making impulsive purchases. In addition, women are more likely to seek saving advice and read about saving tips than men.
The 8 Point Budgeting Plan
Before you pat yourself on your back for being the one who manages finances better, do check if you follow the 8 point budget plan.
These are simple money management tips that go a long way in keeping your bank balance loaded for the good and bad days.
- Save before spending. Put aside money before you spend it on things instead of the other way round.
- Anticipate expenses. Maintain a spreadsheet for all the expenses that you anticipate. Update it every month with your partner.
- Use credit cards sparingly. Credit cards are wonderful to better your credit score, ensuring that you get a better mortgage rate. However, ensure that you pay in full and in time.
- Assess the intangibles. It is easy to own costly things. However, see if it really makes sense in investing in intangibles without much value, like a faster internet connection at home, or upgrade your data plan just to consume more media on the go. Your phone may have a ‘buy back’ value, but the money you spend on cellular data is lost forever.
- Pay cash. This is not what most of the countries promote, but if you actually withdraw cash and spend it on the day to day expenses, you are more likely to save. The reason is, you check the price of every item you buy at Fairprice if you are going to use cash!
- Get a good education plan. Set aside money for your children’s education right from the day they are born. This will make it easier to pay their college fees.
- Buy within means. Concentrate on the needs first. See if you really want that fancy car or the new purse. Don’t blow off an entire salary on a clutch just because your friend purchased a designer one last month.
- Discuss. Be on the same page with your partner. If there is an anticipated expense, do let each other know. And, set a threshold for individual spending. Before you cross that, consult the other. This way, there won’t be financial shocks.
In the end, do remember that it does not matter who manages finances better. As long as there is enough set aside for the future, you are good to go as a family. But do remember, it’s all about doing things as a team.
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