A Must Read Guide to Budgeting Your Household Finances
In a world where prices seem to be going up every day, bills are flooding in and it feels near impossible to keep your head above water, it’s no wonder why it’s a constant battle trying to stay on top of household finances.
Regardless of your situation, the size of your family or whether it’s just you, managing a household budget is the core of a strong financial future. There are three common mistakes however that people like you and I make every day.
1. Never setting up a budget initially – to manage your household finances, a budget that works for you and your situation needs to be implemented.
2. Failing to track a budget that has been put into place – to realise if a particular budget is working for you, it needs to be monitored and tracked to see its exact effectiveness.
3. Creating a household budget that isn’t realistic – what good is a budget if it’s impossible to follow? Take all factors into account and only bite off what you can chew.
Find out What You’re Spending Your Money On
How much money are you spending and where is it all going? It seems simple, but most people only consider the big spending and forget that all the little things add up. Work out how much money you have coming in and going out on average and group your expenses into high and low level categories. Make sure you take into account your purchased coffees during the working week or the odd snacks here and there – you will be amazed at how much you can spend a month on just those!
When You Get a Bill – Pay It!
It’s a very familiar position – you get a bill, glance down at the numbers and return it to your ‘deal with later pile’, it’s a common scenario but an easy trap we all fall into. Stacks of bills and unopened mails leads to bigger fines that ultimately take longer to pay, whilst it may be the easy option for the immediate future, attending to your bills on time can save you thousands.
The best way to save money is to plan ahead. Write down in advance what you need and always keep a look out for discounts and specials. With grocery shopping buying in bulk is a huge money saver, purchase items you use frequently and check the shelf life of items. Planning dinners for the month so you know what ingredients you need ensures less wastage and writing food shopping lists before you head out leaves no room for impulse buys.
Goals and Savings
Budgeting is much easier when you have something to work towards. Having a goal in mind whether it’s a figure you want to have saved by the end of the year, or a family holiday makes the everyday sacrifices easier and worth it. Knowing how much you’re saving on a monthly basis paints a bigger picture and helps determine if your level of saving will achieve your longer term goals.
Plan for Unexpected Expenses
A good budget will not just take into account your short term and long term goals, but leaves room for the emergency expenses we can get hit by. Anything from car repairs, to an unexpected illness can easily leave you back to square one or bring on more debt. It’s a good idea to consider income protection and insurance to help with the bigger emergencies, and having breathing space in your budget can definitely take the stress of unexpected expenses off.
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