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Creating a family and household budget

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Learning to budget your family’s income will help you manage your monthly expenses and can help you to set aside funds for an emergency account. Creating a budget is an effective way to manage your finances.

While creating a budget may seem difficult or confusing, using a budget calculator can make this process simpler and will help you keep track of how much you are spending and saving each month.

The benefits of budgeting

  • Control of your finances – Using a budget calculator provides you with a clear understanding of what you can afford to spend your money on, helping to prevent accidental overspending.
  • Track your spending habits - It can help you cut down on short-term spending like buying a coffee every day; you may be surprised at how these seemingly small costs add up over time.
  • Save for the future – Budgeting can help you put cash away towards a long-term goal like a family holiday or new car.
  • Prepare for unexpected costs – Budgeting prepares you for any unexpected costs or emergencies that may arise, such as if your car breaks down and needs a repair.

Creating a budget

Budgeting can feel daunting at first, and many of us often don’t know where to start. But creating a budget and using budgeting tools doesn’t have to be difficult; in fact, it can be relatively straightforward. Follow these simple steps to create a personalized budget based on your income and essential costs

Calculate your income

You need to have a clear understanding of how much income you can expect in your account each month. Check your paycheck or bank account and make a note of how much you get monthly. If it varies, calculate an average with a budget calculator.

Calculate your expenses

The next step is to list your monthly expenses. Regular payments may include mortgage repayments, rent, food, gas, utilities and internet. Irregular payments may include dental fees, vacations and car maintenance costs.

It can be useful to look back at your statements from the past year to learn more about your expenses. This is also a good way to plan for any fluctuations throughout the year; for example, your utility bills may be higher during the winter.

Once you have budgeted for the essentials, you should now have a clear understanding of how much you can afford to put away and how much money you have left to spend on unessential items.

Planning ahead

From vacations to buying your very first home, whatever you want your future to look like, planning helps you map out your goals.

Planning ahead can help you understand whether you can afford to take on any more financial commitments. If you are struggling to pay your monthly expenses as it is, then it may be best to avoid taking on any significant additional expenses such as a new car.

It is important to remember that financial circumstances change over time, so you may want to consider reviewing your budget regularly. By planning for the future, you can navigate any unexpected changes or potential developments life throws your way.

Get your kids involved

Children often struggle to take no for an answer, especially when it comes to money. Getting your children involved in managing the family finances not only teaches them the value of money, but it also equips them with money management skills they will need when it comes to managing their own finances later in life.

One of the best ways to get your kids involved with family finances is by having regular conversations with them about money. The more conversations you have with your children about money, the better their understanding will grow.

Grocery shopping is a good example of where it may be appropriate to involve your children in family budgeting. Allocate your children a budget and challenge them to find meals for the week. This can teach them good spending habits and can even bring you closer together as a family.

Top tips for your family budget plan

  • Expect the unexpected – You could be faced with an unexpected bill at any point throughout the year, which could knock your finances off track if you aren’t prepared.
  • Pay in cash – Family trips and days out can be expensive. Although paying by card is convenient, paying by cash can help you keep within your budget.
  • Plan your meals – Planning your weekly meals in advance will help you from spending money eating out. This will help save you money.
  • Compare deals online – Thanks to the internet, it has never been easier to compare deals online. If your utility bill has risen over the past year, for example, then you may want to consider switching to a company that will offer you a better deal.

FAQs

Why is it important to manage your finances?

Managing your finances is important as it helps you to keep track of your spending, stick within a budget, and set money aside for the future.

What is the best way for married couples to handle finances?

When it comes to managing your finances as a married couple there are many different ways you can manage your expenses. Two ways to do this may be to either combine your finances by opening a joint account, or keep your finances separate and split any shared bills and monthly expenses equally between both parties. Using budgeting tools for couples is a smart way to keep on track.

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