Creating and following a budget has a number of advantages: you know where your money is going and how much you have to spend and save. It also simplifies making cutbacks if you’re overspending. Here are some tips on how to create and follow a family budget in order to make life better for everyone going forward.
Take a look at your spending: The first step to planning a budget is to have a long hard look at how much you’re spending. You may be in for a few surprises. While most people are aware of big expenditures like mortgage and car payments and utility bills, many underestimate how much they’re spending on small ticket items like coffee and lunches. Start by keeping track of everything you purchase, even that morning snack from the vending machine, so you can see exactly where your money is going. Once you’ve tracked your spending for a whole month, you’ll be able to put your spending into categories. You will also be able to make cutbacks on unnecessary expenses.
Create the budget: Now you know exactly where your money’s going, it’s time to create the budget. The first thing to do is compare your outgoing expenses to your family income. Hopefully, the latter is bigger than the former. Now set a monthly budget starting with essential expenses like home payment, utility bills, food, insurance, gas etc. Divide the money you have left over into categories like clothing expenses, social expenses, and savings. Try to stay on target as much as possible. This may not be realistic every month, but if you do have to go over budget one month, try to make up for it the following month. Review your budget after a few months to see if it’s working out for you, you may see areas where you can make some tweaks to fine-tune it.
How to Calculate your Budget
You can keep up with your budget much more easily if you use a budget spreadsheet like the Household Budget Planner. This Excel spreadsheet will let you keep tabs on 15 different types of expenses including daily living, home, health, transportation, insurance, recreations, and savings. Each category has further subsections to make laying out your budget very simple. The spreadsheet will create a bar chart to clearly display your entire monthly expenses.
Set a target saving goal: Think of something you’d really like to have money to spend on, it could be a new computer, a family vacation, or even paying off your credit card debt. Set yourself a realistic goal and start
Pay off debts: Debt reduction should be a part of your family budget. You should be making at least the minimum payment every month. If you can pay more, obviously you’ll reduce the debt even faster and you won’t be paying as much interest. If you’re carrying the balance on more than one card, try to pay off the one with the highest interest rate first while paying the minimum on the others. This will leave you more money later to pay off the other cards. If you have several credit card debts, you may want to consider consolidating them. This will mean you just have one monthly payment. It may also be possible to negotiate lowering the total amount you need to pay back.
When you Need Money Fast
If you find yourself short on cash and you need money quickly for an emergency, you might have to take out a loan. However, if you’re not careful, this can lead to a whole new set of problems. Fortunately, MoneyBoat offers consumers in the U.K. an alternative option on the form of a short-term loan, giving you more time to pay back the money and easing some of your financial pressure. Check out MoneyBoat.co.uk/short-term-loans to find out more.
Once you’ve used these tips to master your money, you’ll be feeling more in control of not just your finances, but your life in general.
Luke Lambert is a Dad who as well as taking care of the family finances deems it important to teach the kids about the value of money whilst sorting the family budget.