Have you ever sat down and built a budget for your family? Most of us have at some point sat down and written a list of our expenses. Often when we’re trying to work out if we can afford something new or to upgrade our contracts. Then, when we’ve made our decision or got a brief idea of our finances, we leave our budgeting behind. So few of us have a household budget that we use day to day. A budget that we can turn to when we need information about our finances, or when we need to know where our money has been going.
You should. A family budget that works can help you to manage your money. It can make it easier to save, to pay off debts, to make the right financial decisions and to take control. It can help you to feel more confident with money and give your family greater economic freedom and independence.
Understand Your Finances
So many of us are guilty of not having a clue what is going on in our bank accounts. We spend money, we sign up for new contracts, and now that so few of us ever use cash, it can come as a bit of a surprise when we check our balances.
If you want your family budget to work, you need first to understand where you spend your money and how much you earn. Take a good look at your bank balances and statements and start writing everything down.
Make Some Cutbacks
Once things are written down and easy to see, you might start to notice how much you are spending. This is the time to start looking for places to make some cutbacks. Cheapautoinsurance.co can help with your car insurance, but you should also check uSwitch.com to make sure you are getting the best deals on your utilities.
There are two main reasons that family budgets don’t work. The first is that we aren’t realistic. We overestimate how much we earn and underestimate how much we spend. This can make the totals at the bottom of your budget look much better, but it won’t help when it comes to managing your money. If you want your budget to work, you need to be realistic and honest with yourself. If you spend £10 a week on chocolate, it needs to be in the budget.
Keep it Simple
The second reason that our budgets don’t work is that we over complicate them or we set unrealistic goals. Use a basic budget spreadsheet to record your spending, so that it’s easy to add and change things. If you want to set yourself goals, keep them small, or break a large target down into more manageable amounts.
Remember to Update it
Once your budget is set up and working, you just need to remember to update it when things change and to consult it before you make any changes to your finances. A simple spreadsheet should be easy to edit when you need to.