As daunting as the task may seem, building a family budget is important. Don’t complicate the task by trying to build a complicated spreadsheet, unless of course, you are an expert at this. Instead, old-fashioned paper and pencil can easily map the layout for your family budget. Below are five useful tips to help begin your family’s budgeting journey.
Determine Your Goal
Goals vary from family to family, whether it be a home purchase, remodeling project, wedding, or all-inclusive vacation. Regardless, goals can help discipline a family into saving money by a specific deadline. If all members are a part of the goal, ensure they reflect on it and decide what needs to be done to meet it. For children and adolescents, there are plenty of finance apps available to track income from chores. This can help guide them toward their own goals, whether it’s a new car or awesome toy.
Divide Fixed and Discretionary Spending
Divide your fixed expenses including a mortgage, monthly utilities, car payments, and other set bills from discretionary expenses. Many individuals do not realize how much they really spend eating out, traveling, buying clothes, and other miscellaneous expenses every month. It is wise to establish realistic monthly allowances for both sets of categories based off your current habits.
Pay Off Debt
For many American families, debt is a huge reality. A budget can help you dig your way out of credit card bills, student loans, and many other forms of debt. Set aside more money than the minimum monthly payment. This helps to reduce interest on balances and can help you pay less over time. It is also a great way to improve your credit score.
Incorporate a Buffer
Some monthly bills tend to fluctuate, such as utilities. This should be incorporated into the budget as a buffer. Furthermore, set aside money for emergencies including sudden medical expenses or auto repairs. Having additional money for those contingencies will ease your mind. As a rule of thumb, three months of bills should be saved up in the event that a sudden job loss or other significant event were to occur.
Modify Billing Cycles
Many individuals do not know this, but billing cycles for monthly expenses can be changed. Spacing out due dates versus having all bills hit at the same time can help you meet your goals without feeling strapped for cash. Simply call the company or visit their website to make these kinds of changes.
Running a family has significant demands, but it is important to look at family finances in order to save for the future. A realistic budget can help you better meet your financial goals!
Tags: billing, debt, finance, goal, money