If you are tired of living paycheck to paycheck every month and the debt keeps piling up, setting a family budget is your best chance to get back on track. However, I need to point out that living on a budget doesn’t necessarily mean that you can’t afford to purchase everything you want. It means that you are smart with your money and you want to make the paychecks last longer.
The “secret” behind successful family budgets is making a plan and sticking with it, no matter what. No one tells us what is the best way to budget in school or college and fortunately for you, I did all the research so that you don’t have to! Follow the next steps and your family budget will be up and running in no time.
1. Track the expenses
The first step that you need to make when planning for a family budget is to track the expenses. Gather all the bills that come in your mail and don’t forget about the bank statements.
The next step is to get a pen, paper, and calculator. This should always be within your reach on a daily basis. Then, track your daily spending. This will be hard and “extra work” at first, but you’ll thank me when this becomes a habit. Track all the money you spent and the money that comes in. From there, you will have a better understanding of your finances and your spending.
It’s easy to spend more money than you can afford when you don’t know exactly how much your family’s monthly expenses are worth. Plus, you wouldn’t know what the unnecessary costs are until you take note of them.
This trick is not new. In fact, Japanese people swear by it. They call it Kakeibo — the Japanese method of saving money.
2. Set your goals
What is the reason why you are interested in planning for a family budget? Do you want to take your family on a nice trip during the summer? Or are you thinking about setting a college fund for your kids? Determine what is your goal and markdown how much it costs. Now you can calculate exactly how much money you need to save per month.
Many moms who are in charge of running their family budget are saying that the best thing to do is to set short-term goals that have long-term benefits. For example, your financial goals can include things such as reducing your overall pay on utility, TV cable or internet bills. Sticking to these goals is not going to be easy, but your kids will appreciate you even more for it!
3. Do your taxes the right way
Financial advisors are saying that a large number of adults don’t really know how to do their taxes the right way. If you are in this situation, you shouldn’t feel ashamed. After all, no one teaches us at school how to do our taxes and manage our finances.
You can tweak your taxes and save up more money than you can imagine just by picking the proper filing status. There are different ways to improve your taxes and as a mom, you shouldn’t miss out on child care and dependent care expenses.
4. Money for food
If you take a close look at your monthly expenses, you will quickly find out that most of your money is being spent on food. (by the way, here are 15+ tips in grocery budgeting) The sum is even bigger if you make a habit of eating out with your family. Fortunately, you can avoid this by creating a well-planned food budget. Don’t make the mistake of ever going to the grocery store without a list again! Create a shopping list before leaving the house and you will be able to prevent spending hundreds of dollars on new and eye-catchy sales.
Only buying the groceries that you need will keep your kitchen pantry stocked and you will not end up with lots of unnecessary things. Another great idea here is to create a meal plan for the week so that you know exactly what to buy. If you are out of ideas, you can check out some recipes from other moms here.
5. Emergency Fund
The last thing I wanted to cover is the need for an emergency fund. I know that no one ever plans for an emergency, but you can never predict a financial crisis. Something might happen at your workplace and your family’s monthly budget will need to be cut in half. Here is why an emergency fund comes in. Putting aside extra dollars every month will help you save up a good amount of money that you can use in dire situations.
Talking about setting money aside for peace of mind, I should also mention that getting health insurance is never a bad idea. Kids can get sick out of nowhere, and trust me, hospital bills are expensive. If your budget allows you to get health insurance for your entire family, then you should do it as soon as possible.
And that sums it all! Do you have any family budgeting tips you swear by?
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