It used to be that the household finances were something that more or less managed themselves, but with many people seeing a gradual decease in the amount of money that they are taking home each month and the rising prices on domestic fuels and general groceries, budgeting is something that more and more households are having to get to grips with. If you have never had to worry about where the money was being spent before or have never had to keep a tight rein on the purse strings getting to grips with a budget plan, times like these can be quite daunting and can lead to arguments over the amount of money that certain people are spending without fully realising. Finances are often a bone of contention between couples and questions about where the spare cash has gone can often lead to arguments and accusations so approach the introduction of a budget with caution.
Look at Your Expenses
In order to plan a successful budget you need to have a clear understanding of where your money goes each month. The easiest way to start is by listing down all of your regular expenses such as rent or mortgage payments, utility bills, internet and phone bills, cable TV bills, credit card payments and fuel expenses as well as anything else you make a regular monthly payment for such as store cards or subscriptions. In order to see where savings can be made you need to see exactly where your money is going. You are probably looking at a scarily high amount of money at the bottom of that list too, right?
So go back through the list and make sure that these are things that you have to pay, that cannot be avoided. For those that can be reduced or cut out altogether look at them separately; this will probably include things such as cable TV subscriptions which can always be cut down, the monthly bill for takeaways and nights out that can be reduced etc. See if you can spot places where savings can be made and do something about them as this will leave you with more ‘spare’ cash for other things.
Set Yourself Goals
Budgeting is hard, and you need to have a certain amount of self-discipline to be able to do it successfully. One of the best ways to keep yourself motivated throughout the time that you are living on a budget is to set yourself some goals. By setting your goals right at the beginning of the process you will be fully aware of what you are going through this whole process for. One of the main reasons people start to budget is because they have let their spending go unchecked for too long and have now found themselves in a financial hole. They start by implementing some quite drastic changes that totally alter the way that they are used to living their lives, which can be quite difficult to get to grips with, but there is no need to do something quite so drastic as smaller changes here and there can lead to the same results and still allow you to enjoy your life.
One of your goals could be to reduce the amount you spend on utility bills so you need to start educating the family on switching electrical goods off rather than leaving them on standby, turning lights off when they leave the room and wearing a sweater instead of turning the heating up, which are all great places to start and all will have real long term benefits on your annual utility bills.
The Budget Applies to the Whole Family
Just because you are managing to make savings in one area of the household it doesn’t mean that the rest can leave the budgeting to you and just carry on regardless. A family budget needs to be just that, applicable to the whole family. Work in partnership with your spouse or partner and keep the kids informed of any changes that you are making to their routines such as cutting back on weekend outings or fast food treats, all of which impact on your family finances. Make sure your children know why you are doing this so they can be sure that it is not some kind of punishment. As a family you all need to appreciate that just because you want something it doesn’t mean that you should buy it, purchases should be made based on need not want as this will stop a lot of impulse buying. Know how much money you have to spend each week on things like groceries, family clothing, fuel for the car and mobile phones and stick to that amount. Any money that you have left at the end of the week can either be put towards your outstanding debts or tucked away in a special savings plan.
Getting to grips with the family finances and setting a budget is a great first step to getting yourself out of debt without the need to take on professional advice about protected trust deeds, IVA’s or bankruptcy. By taking the right steps today you could be protecting your financial future.