When you have a family, it’s important that you keep tabs on your finances. It is after all the adult's responsibility to ensure that your family is well provided for and that you are doing everything within your power to safeguard their financial future.
When you develop a habit of living on a budget, you can definitely review where your finances are in comparison to where you’d want to be in the future. While budgeting is not a pleasant topic for most people, you really need to embrace it when you have a family. In this article, you’ll find some actionable tips to help you create a workable budget and stick to it.
Understand your most important expenses
When you’ve made a decision to budget, you should start with the basics. Carefully consider what you need to spend your money on a monthly basis. This implies that you need to focus on your needs and cut the expenses on all your wants. In the absence of this move, it can be really difficult to spend within your means.
If you find this to be a difficult undertaking, you don’t need to worry. With time, you will find it easy to deal with because you’ll have realised what’s practical and what is not contributing to your financial stability.
Determine your total income and plan your spending
Knowing how much you make in any given month is crucial to organizing your finances. Besides your salary, any additional income should be included in your plan.
Now that you had already identified your needs, you should allocate the available funds to the needs according to their level of importance. This is quite important because it’s the only way you will avoid losing lots of money to items that don't add any value to your life. In fact, when you are oblivious of your income and expenses, you can easily go into debt and to get out can be an uphill climb.
Include a cushion for important expenses
At times, you may realise that you need some additional money to meet expenses that you hadn't planned for earlier. When you are budgeting for things like family vacations and eat-outs, always ensure you’ve included a sufficient cushion just in case there is an additional expense that you had not accounted for.
When you are dedicated to following your budget strictly, it can be quite disheartening when you realise that you went above what you had planned to spend. To be on the safe side, always include about 10% as a cushion for the unexpected expenses.
Always have an emergency fund
Life can be quite unpredictable at times and this can make you spend a lot more than you had imagined in a month. To most people, this can make you end up with disorganised finances no matter how diligent you’ve been with your budget in the past.
By now, you know that some emergency expenses can be quite high especially if you are in a hurry to get something fixed. Instead of spending money meant to pay for your three months’ rent, you’d be better if you had some money saved up to deal with things like emergency car breakdowns.
Basically, your emergency fund should be enough to cover about six months of your family expenses. This means that even if you lose your job, you will have sufficient money to survive comfortably.
Review your budget regularly
Over time, your expenses can change. If you don’t review your plan on a regular basis, you might be working with an outdated document. If you’ve just had another child, your expenses will definitely increase and you need to adjust your budget accordingly to accommodate the changes.
At the same time, you may have taken a new online loan to make a purchase. In order to make timely payments to your loan, you have to factor in the required monthly payments into your plan. Nevertheless, you should always ensure that you are dealing with a good lender as well as using the right loan for the right purpose.
Learn how to be content and happy with your life
When you are seeking to live within your means and make savings, you need to learn how to view happiness from a different perspective. This means you should be content with your current achievements as well as remain enthusiastic towards your future goals.
Saying that you will be content is not enough; you need to embrace your new lifestyle. Basically, if you want to succeed in budgeting, you can’t afford to harbour feelings of discontentment because this can drag you back to your former habits.
While budgeting can be daunting at first, it can be your best shot towards keeping your family finances in a great shape. Because everyone’s scenario is different, you should be the one to create your budget. In fact, this can be a simple process and if you are diligent and realistic; you’ll only be required to track your progress periodically.
In the long run, this will result in better finances and you will be a better parent who can safeguard the financial future of your family. The earlier you start, the sooner you can enjoy the benefits.