How to Budget as a Family
Whether you’re facing a difficult financial period or you just want to have more disposable income, working out a family budget can be one of the most rewarding stress-relievers out there. Best of all, it’s simple and anybody can do it. Here’s how:
Track Your Expenses
A couple decades ago, you’d have to sit down with a pen and paper, gather all your bills, paycheques, bank statements, receipts and more and do maths to work out your family’s cash flow. Luckily, that’s no longer necessary. With apps like Yolt, you can track your spending across multiple accounts, so you can easily see how much you’re spending every month, compared to the money coming into your accounts.
Scrutinize Your Expenses
Ideally, you should be saving a bit of money every month for a rainy day or even to make investments in the future (anybody can invest, no matter how much your income is). The only way to save is if your expenses are less than your income.
Look through all your regular expenses: can you do things for less money? Try to limit pre-prepared food and drink that you buy as this will always be more expensive than buying ingredients at a supermarket and making it yourself. Try to buy things like loo roll wholesale if possible. This is exactly what businesses do to stay afloat, so your household really isn’t too different.
Have an Emergency Plan
Almost a third (31%) of British workers live paycheque to paycheque to make ends meet thanks to the 2008 recession and its consequent austerity. If that’s you, it can be very stressful to live without an emergency plan. If things go wrong, how are you going to survive?
Budgeting is a key way of dealing with these stresses. Once you’ve scrutinized your expenses, you will normally be able to live within your means, unless you have massive debt. If you do have a massive debt, by the way, it’s worth approaching your creditor, presenting them with your budget and telling them the truth – you have found a way to live within your means but your debt is holding you back. Ask if it’s possible to restructure terms. Many creditors will be happy to take lower payments for a longer period if they have faith you will be able to make those payments.
If you’re living paycheque to paycheque and have just started budgeting, consider what you will do in an emergency. If you have a bad credit rating and your only solution will be a loan for those with bad credit, make sure you check those rates before you need that loan and incorporate them into your budget. This will mean you’re saving more each month and don’t have to make a sudden jump in quality of life in an emergency.
Be Honest with Everybody
Money is one of those things that many find it really hard to talk about. When you have a written budget, you should find it becomes a lot easier. You should sit down and go through your budget with everybody in your family so that you’re not arguing with anybody when trying to enforce that budget. Make sure everybody is on the right page. As previously mentioned, extend this honesty to anybody to whom you owe money. It’ll be a lot easier to renegotiate any loan terms if you are completely honest and have a plan.