The best time to start creating a budget is now. Before the debit orders, before fulfilling family obligations, and before your 'treat yourself' expenses take over, the first place to start is with a budget.
There are plenty of budget planner apps that are available to help you keep track of your expenses but knowing how to budget as a family can go a long way. Here are a few handy tips to get you started.
Before we start
The following should be used as general advice and should not be used as financial advice or as a legal guide to your finances. Speaking to an accredited financial advisor can help you find a solution that will be suitable for your finances and family.
What is a family budget?
Creating a budget planner that keeps track of your family expenses is known as a family budget. It works in the same way in which you will split your budget to accommodate your needs and wants, but it gives more room for everyone in the family to be more conscious of how they use money. It is a great way to keep track of your spending and curb unnecessary financial strain. The sooner you let your young ones understand money, the better your financial legacy will become.
Keeping track of your money
A budget is a way to tell your money how it should work for you. It can also highlight areas in your life where you are overspending and how you can cut back. Start with your income and break it up into a list of your needs and wants.
Encouraging everyone in the family to be a part of the budgeting process can also create realistic expectations on what you can and cannot do financially. For children, you can help them create a budget with their pocket money which breaks down the things they want and need.
The key is to never spend more than you earn. If that is the case, then it is time to cut back. Look at the things that need immediate attention financially such as reducing debt and saving towards emergency expenses. Printing out your bank statements from the past three months can give you a clearer picture of what you spend your funds on, making it easier to spot the things that are causing you to bleed financially.
Adjust your expenses
Financial management doesn't have to be difficult, but you may need guidance from a professional who will be able to help you find your financial sweet spot. Once you have a clearer picture of what you earn and what you spend, adjust your expenses accordingly. Honesty is the best policy. Not only with yourself, but with your family.
Should you find that you are spending more than you earn or spending to the point where you have no money left over, it means that you could be over-extending yourself. It can lead to you relying on things such as credit and overdraft accounts just to make it through month-end, which can do more harm than good in the long run.
Find new ways to grow your money
Take a look at your expenses that are not fixed and try to find ways to cut back. For example, adjust how many times you eat out, what you spend on entertainment, and looking for alternative brands when shopping for groceries.
As a family, make a list of things that you can cut back on and how best you can make use of the money that becomes available.
A starting place can be a savings account or investment account that has a good interest rate to help you grow your money. Make sure that you have financial safety net in place such as life cover and/or investments in shares and educational saving accounts. You don’t have to get them all at once, but gradually building your way towards these can leave you and your loved ones better off than when you first started.