Budgeting To Help Control Your Money
For some people, the idea of budgeting brings stress, just by thinking about it, but having a budget does not have to be a major battle. Just a few guidelines, followed consistently, will help anyone to know where they stand with their money and that can very often bring peace of mind, even when times are tough. By knowing your financial situation, you are less likely to blow the whole month’s planning out of the window with just one unwise purchase.
What is a budget? A budget is a tool for handling your finances by controlling the family’s expenditure to ensure there is enough money to pay for bills and still see that savings are set aside for future expenses such as holidays, children’s education or even for retirement.
Having a family budget which includes children’s expenses is an invaluable way to teach children about handling money responsibly while they are young. Good habits learned as a child will mean that when your youngster leaves home to live independently, you can be confidant that he or she will know how to budget and handle their money wisely and won’t blow your own family budget with requests for a handout.
Here are some simple steps to prepare an easy to follow budget for your family.
1. Collect up three months worth of payslips, paychecks or stubs and get your average monthly earnings.
2. Get out three months of your fixed bills such as rent or rates, electricity, gas, phone bills, car expenses and any loans that you pay monthly. Add them all up and get the average. Now do the same with consumable items like food and household purchases and also credit cards.
3. Examine your average earnings and spending, taking a careful look at what comes in and what goes out. If your expenditure is higher than your earnings, you are probably using a credit card too much and you will soon be in big trouble as you max the card out. Look at all the ways you spend money and see what areas you can cut back on.
4. Open up a savings account and deposit money regularly, even if you didn’t save as much as you planned for that week or month. Doing something regularly forms a habit and when you have a savings habit you are more likely to stick to your budget than if you just save occasionally. Ideally, you want to save at least 10% of your earnings so that when unexpected expenses crop up, like medical costs, you can cover them and when school trips or camps come up for your kids, they do not have to miss out because there is no money.
5. Try very hard to stick to your budget. It may be hard at first if your aren’t used to it, but it gets easier and more rewarding as time goes on.
6. Assess how you are going to see how it is working for you; you may need to fine-tune in some areas.
7. Sometimes using personal budgeting software or a spreadsheet to keep records can make it easier, especially when it adds up all the figures for you.
Naturally, every family has different needs so their budget will be different too, but the main ideas are the same. However you do your planning, stick with it and you will notice a change for the better within a few months, Focus on the end result, which is to save money and bring some security for your family in the financial area.
Tips for Saving Money
(a) When you go shopping, have a list and stick to it.
(b) Use coupons when available. Take the time to cut them out and organize so they are ready for when you go shopping. You can often save $20 – $30 in one grocery trip by using coupons.
(c) Also look for coupons or reduced prices on the websites of entertainment venues, e.g. movies and DVD hire. Sometimes there is a certain day of the week when everything is cheaper.
(d) Take lunch to work instead of buying ready-made at lunchtime.
(e) Eat home-made dinners as much as possible. Plan menus that are practical and easy to cook to encourage eating at home and save by only dining out on special occasions.
(f) Reduce the number of times you buy coffee at a coffee shop each week.
(g) Turn off appliances and lights when they are not in use and use energy saving lights to cut your power bill.
(h) Keep up with maintenance round the house. Often things that would have been easy and cheap to fix earlier become major expenses later when they are not seen to.
(i) Try to insulate your home; this is a proven energy and money saver.
(j) Do not purchase on impulse. Consider whether you really need the item, or whether you can put it off for later.
(k) Avoid shopping to de-stress. Try walking round the block or the park instead or maybe watch a movie.
(l) When you are saving for a short period or for emergency purposes, consider a savings account that still allows ready access to the funds. This way you can still gain access to the funds if you need them and the money is out of temptations way for that quick trip to the shops.
(m) Get a bank account that pays you interest as often as possible. Usually if you can maintain a higher balance, you can get a higher rate of interest, perhaps reduced fees or a higher allowance of ATM, online and over-the-counter transactions. Shop around for the best deal to suit your purposes.
(n) Pay off your credit card balances each month and avoid finance charges, Better yet, use cash as much as you can unless using your card would give you a better deal.
(o) Determine the things that are important to you, Understand the difference between what you need and what you want. Needs must have priority over wants.
(p) Look for a person who can serve as a role model for you and adopt a financial lifestyle similar to his (or hers). When you see others who are actually doing what you want to achieve, it makes it easier for you to do it, too.
(q) Practice self-control – it will help you to put aside money instead of spending it and reduce that urge to spend money just because it is in your hand right now.
Even a small amount saved will help you with your short term or long term financial situation, so don’t put budgeting off just because you can only save a little bit now. It all adds up and will help you reach your goals.
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