Budgeting is an important part of being financially free. It may not be what gives you a buzz but it doesn’t need to be that way. When you see how your money skills are beginning to grow you will come to the realisation that a family budget has helped you to avoid past stresses. These stresses come from not knowing where your money is going and if you are able to pay your bills when due.
The following tips will help to set up your family budget and manage your money wisely.
1. Set yourself realistic financial goals and make a money plan – a budget
2. Make sure your budget includes a family allowance to cover entertainment and allow yourself some pocketmoney for your own personal daily incidentals. It will work better if you do not feel deprived.
3. Set up savings and spending system s that work for you. When doing your family budget allow a sum for savings and ‘pay yourself first’. This is very important for your financial freedom.
4. Do not make ends meet by using credit cards and stay away from ATM machines and cash advances – do not cheat on your budget.
5. Use your credit cards wisely and pay them in full each month. The expenses on your credit card should be allowed in your budget so that you know the money will be available to make payment on due date. If you are unable to resist the temptation of using your credit card for unplanned purchases leave it at home.
6. Make sure your necessities are covered and look for ways to cut expenses.
7. Set up a reserve account for emergencies. Allow an amount each month to build up to at least three month’s worth of income. This is not for everyday spending – it is for the unexpected.
8. Get all the family involved in the family budget. Let each of them set their own goals and work out how to make it fit in the overall family budget.
9. Become more frugal and cut back on living expenses. Find alternatives for a simpler lifestyle. Brainstorm ideas with the family.
10. Let children learn the value of money. If they want something ask them how they think it can fit in the family plan. Encourage them to save for the item themselves. Make a ‘chore money jar’ for chores which are separate to their normal duties such as washing the car or painting a fence. Giving a child everything they want without working for it does not teach them valuable money skills.
While many people believe that money is made simply to spend your common sense will tell you that it’s not wise to spend all your money today. Take control of your finances by doing a family budget and become financially free.