(MENAFN- Khaleej Times) Managing a household's finances is in many ways just like running a small business. And for the one in-charge of managing this, the term 'Chief Financial Officer' seems apt. Just the way a company's CFO is expected to oversee all financial activities involved in running a business successfully, a household CFO must actively and efficiently manage the family's finances.
Whether you're working full-time, part-time or are a stay-at-home mum, you can absolutely become the CFO of your household and therefore an expert at handling your household expenses. So, what's included in your CFO responsibilities? Making informed financial decisions, managing regular and temporary outgoing payments, making cutbacks when required, handling income and expenses, and maximizing savings in the process. All-inclusive budgeting and expense management Keeping track of how much you spend every month on regular household bills is no easy job. These include regular expenses like groceries, utilities, telecom bills, and recreational expenses. Other than these, you also have to account for fixed financial commitments like rent, car/personal loan installments, school fees, and insurance premiums. A budget is a great tool for keeping track of your income and expenses. It helps you control expenses, stick to your savings goals and prevents you from going overboard. Here are a few budgeting and expense management tips for your household: Choose a budgeting style that you're comfortable with. It could be the 50/20/30 rule wherein you allocate about 50 per cent of your salary towards needs, 20 per cent towards savings and 30 per cent towards wants, or another budgeting method more suited to your financial situation and requirements. Keep track of all your bills and receipts by making a note of these in your budgeting records before you crumple and toss them in the trash. Set reminders for monthly bill payments to avoid missing them. You can set up automatic payments for your Dewa, du/etisalat bills and more through the direct debit facility set up on your bank account or credit card. Also make your monthly credit credit card payments via the auto-debit option to avoid missing the due date and paying hefty interest on the overdue amount. Don't find the pen and paper budget appealing? Create one as an excel spreadsheet or even manage your budget via one of many user-friendly budgeting apps. Don't underestimate the emergency fund. Financial emergencies don't come with warning bells. Make sure to set aside some money every month to maintain and replenish your emergency fund. Meeting savings goals and managing investments When you're keeping track of exactly what's coming in and going out in terms of money, you're automatically best positioned to set savings goals for your household. You will have to decide where to save the money and this will involve research to find the best option whether you select a savings or deposit account in the UAE, or if you want to opt for an offshore bank account, National Bonds scheme or any other savings tool. Want to invest money to get better returns? If you don't have the time or inclination for independent research, you can seek advice from a licensed financial advisor who can offer you investment options like retirement savings plans, pension funds, education plans and more. Here are a few tips which can be useful when investing money: Remember to keep your portfolio diversified and not put all your eggs in one basket. Once you've invested, it's also important to keep track of how your investments are doing. This is all the more essential in case of investment plans and retirement savings plans which are usually for longer terms. Don't be afraid to cut your losses if you have to. Sometimes an investment may not perform as expected. This may require making difficult decisions regarding whether to stay invested or exit with minimal losses. Don't over-commit when it comes to investments. For example, committing to pay AED 5,000 every month towards a 15 year savings plan may seem feasible now, but your financial situation may not be the same after a few years, so it's best not to stretch yourself thin and only invest what you're comfortable paying. More and more women are now independently managing their family's finances. A clear sign that financial confidence amongst women is on the rise, and managing household finances is in no way a challenge for the modern woman. The writer is the founder and chief executive officer of Souqalmal.com. Views expressed are her own and do not reflect the newspaper's policy.