In today’s economy, many families find that once all of their monthly bills are paid, there is little disposable income left. There is no money for entertainment and very little money when it comes time to take a holiday from work.
It might be that mum and dad didn’t sit down to write a budget, or it could be that the budget they calculated was insufficient to meet their needs. Perhaps they allocated too much money in the wrong category and, of course, not enough where it needed to be.
Then there are all those little family emergencies that just seem to keep popping up at the worst possible moments.
Whatever the case, family budgeting doesn’t need to be rocket science. Following is a brief guide on family budgeting made easy.
Keep it real
One of the biggest mistakes so many people make when setting a budget is in overestimating the income that they believe they will be making. You can’t always count on those bonuses you have been getting because they are just that, a bonus; something extra that isn’t guaranteed as part of your salary.
Although it is imperative that you start with calculating your income, you need to keep it real. Don’t count on those little side jobs you’ve been doing and don’t count on that big Christmas cheque from grandma and grandpa. They may have had a bad year as well! It can’t be said enough that a budget is only as good as the figures you enter, so it is better to err on the side of caution. We’ll talk about ‘extra’ money in a moment.
Obviously, the most important items on your budget will be those necessities you must pay. That would include your rent or mortgage, utilities, food, clothing, car payments and insurance. At this point you are ready to throw your hands up in defeat. Your ‘real’ income either falls short of your necessities or just meets your needs. Don’t fret just yet. There are things you can do here as well.
Cutting back on necessary expenditures
There are always ways to cut back on those necessities. No, you can’t usually pay less for your mortgage or car payments, but even those are negotiable if you put a little effort into it! Have you considered speaking with your lender about refinancing your mortgage loan terms? Maybe if you extend payments out a year or more, the monthly payments will be significantly less. Yes, you will be paying for a longer period of time and the interest rates will add up, but if you are struggling to survive, this may be a last-ditch effort to make the ends meet.
Now it is time for your car insurance renewal. Are you paying more than you can comfortably afford? It just might be that there is cheaper insurance out there with the exact same cover you have now. You can get an unbiased car insurance quote on sites like Quotezone. By answering a few questions, you will then be matched with providers that may be able to offer you a comparable policy for much less than you are paying now. With this comparison system you are able to compare offers from more than 100 different providers before making your decision.
Don’t be afraid to reassess regularly
One thing you should be aware of is that your budget isn’t written in stone. Although you should follow it religiously, you can recalculate if your financial circumstances change – for the better or worse.
It would be a wise idea to use some kind of bookkeeping software to track your finances, such as Quicken or Banktivity for Mac. It doesn’t matter whether you are good with maths or not, personal financial software not only does the calculations for you but will save any changes you’ve made, and some will even make suggestions on how you can save even more. From budgeting to investments, it really pays to spend a few pounds on something that can help you work your way back to financial stability.
At this point, you may be asking how to format a budget and what categories should be included. There is plenty of information on that around the web. However, in order to make family budgeting easy, it’s important to learn a few tricks and get a bit of information on what you may have been doing wrong. A budget is always easier to stick to if you’ve been honest in your calculations. Don’t assume anything. Start with what you know you have and owe and from there you can make adjustments. Not only is this the easy way, but in reality, real figures yield real results. That’s the bottom line.
Thank you for reading.
*Disclaimer – This is a collaborative post*