Managing a Household on a Budget

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( — April 8, 2020) — When you’re cash-poor, the last thing you want is to spend money on what your family doesn’t need. A budget is handy as it ensures that you set aside money for essential household budget expenses. 

To gain control over your money, you need to know how much money is coming in, how you are spending it, and what remains for long-term goals and emergencies. 

The article will show you how to set up a budget and manage your family income effectively.

Setting up a budget

Creating a family budget is the first step towards financial freedom, but budgeting techniques may vary.

Step #1 – Set goals

Goals are determined by the nature of your needs and wants. Immediate goals comprise all the necessary current expenses such as rent or mortgage, food, utilities, childcare, car loan, cell phone. 

Discretionary goals comprise all needs that you can easily do without in case of financial challenges, including subscriptions, vacations, and donations. 

The third category is long-term expenses, like retirement payments.

Step #2 – Evaluate income and expenses

You will likely incur some unplanned costs, and your income may also change with a promotion at work, a pay rise, or tax refunds.

To achieve your financial goals, you need to monitor all monthly income sources, including wages from a short-term gig and child support payments. List all your fixed expenses, and carefully evaluate your variable expenses, such as groceries and gas expenses.

Step #3 – Analyze your spending

You need to ensure that your expenses do not surpass your income. If there is a deficit, start analyzing the areas that need adjustments. Typically, discretionary expenses are the first to strike off the list.

Step #4 – Revisit your original budget

As you continue monitoring and adjusting your expenses, you will eventually have a clear idea of how much you spend.

By the end of the year, you will have expenses you had forgotten to include in your original budget, including unexpected costs and adjusted medical expenses. 

Step #5 – Commitment to your budget

Setting up a budget is easy but sticking to it isn’t. Adhering to your family budget ensures that your family does not go hungry. Bills will be paid on time, and loans will not accrue unnecessary interest and penalties while savings keep growing.

Tips for sticking to the budget 

Here are a few budgeting tips to help you commit to your budget:

  1. Track all deposits and purchases.

  2. Print your monthly statement and cross-check it against your daily notes.

  3. Group your expenses according to importance, from basic needs to discretionary expenses.

  4. Pay in advance. Look for GA natural gas companies that provide longer-term contracts. The monthly GA gas prices start from $0.299 per term, but you can sign a 12-month contract.

  5. Get an accountability partner. You can do this by involving your bank through standing orders for recurrent expenses. Your spouse can also help.

  6. Allocate some money for fun activities to prevent dipping into your emergency fund.

  7. Simplify the budgeting process by using an app. If you are finding it hard to track your expenses manually, try Excel spreadsheets, online budgeting software like Manilla, financial management software such as Quicken, or other budgeting tools from your bank.

Household Money Saving Tips 

The ultimate goal of a budget is to secure your financial future. Here are household simple money-saving strategies to embrace:

  1. Plan meals and avoid impromptu take-outs.

  2. Shop at discount stores and look out for coupons and seasonal sales.

  3. Focus on reusable items instead of disposables, like a water filter instead of bottled water

  4. Open a different account for the emergency fund and set aside a fixed amount of money per month. If you earn money regularly from business or consultations, you can save daily.

  5. Follow up on hidden income sources, such as tax refunds.

  6. Buy used bicycles, books, and toys.

  7. Avoid accumulating credit card debt.

  8. Save energy costs and teach your children to do the same by turning off the lights.

  9. Negotiate lower rates on bills, such as medical fees.

  10. Utilize price comparison apps before shopping.

  11. Stick to the recommended percentages on bills and savings. The rule is that your rent should never exceed 30% of gross income. 10 to 15% of your income goes straight to the emergency fund, 10-15 % to automobiles, 20 % to student loans, 10% to utilities, and 10 to 15% on food.

  12. Plan for money before you receive it to avoid unnecessary spending. 

  13. Be open to new things and brands.

  14. Buy offseason. For instance, buying a house in winter will give you lower rates compared to buying in summer.

  15. Talk to a financial advisor for automatic savings options. For instance, you need a total of $227,000 to raise a child from birth to 18, on average. A childcare savings plan will give you tax exemptions and make these expenses manageable.