Though many dislike the notion, proper family budgeting can help your family move toward financial success. Knowing where your money comes from and where it goes, you can pay off debt and save for retirement or college expenses. It all starts with tracking your expenses and then planning for them.
The key to successful budgeting is finding a system that works for your family. Many families find success using budgeting spreadsheets, which allow them to track actual and projected expenses easily. Another technique is to use a cash-only method, such as the envelope system of putting the allotted money into a categorized envelope and only spending that money. Some families do best by saving at the first of the month, while others do better by saving at the end.
Write it down
Seeing things in writing makes you more conscious of it. Whatever method you choose, you need to be able to see — physically — where your money is going, rather than trying to keep up with it all in your head. When you write everything down, you can be sure that you aren’t forgetting everything.
Needs versus wants
If you’re trying to save money, it’s important to distinguish between your family’s needs and wants. You should only buy the things that you really need, saving the things you want for a later time.
Dealing with debt
If you only pay the minimum amount due on your debt, you’re going to take a long time to pay off your debt and you’ll end up paying much more in interest. When you budget your money, you can allocate a larger percentage of your earnings toward paying down your debt. Some feel that it’s best to tackle debt with the highest interest first, but others prefer to tackle the debt with the lowest balance, because it’s more motivating to pay off a debt.
Look for ways that you can cut costs, because you’ll then have more money that you can apply toward debt or savings. For example, by making a shopping list and using coupons, you can decrease the amount of money you spend on groceries. You can also do simple things like turning off lights when no one is in the room or using your air conditioning less.
Increasing your income also gives you more money that you can use toward debts or savings. While you may not be ready to ask for a raise at your job, you can look for part-time work or even sell things around your home that you don’t need. Every little bit counts, but it’s important to use the extra money to meet your financial goals rather than spending it on other unnecessary expenses.
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