Managing family finances can be a serious struggle, especially if you’re paying for a large household. Creating a workable budget is a crucial part of good financial management. Having a budget will ensure that you have enough money to pay for family essentials such as rent and groceries. It will also help you identify ways to reduce your spending and save more each month. Making a household budget doesn’t have to be a difficult or time-consuming task. Here are some simple tips to create a family budget.
Track income and expenses
Your first budgeting task should be to assess your current financial situation by tracking your income and expenses. Make a list of all your monthly expenses including rent, utility, food, entertainment, clothing and so on. Then, subtract this from your monthly income i.e. your salary. Doing this should give you an idea of how much you can afford to save each month. Create a household budget based on your expenses and try to avoid spending more than that amount each month. Remember to avoid making your budget too restrictive by factoring some ‘fun money’ into your budget. This can be used to pay for fun activities and treats for your family.
Create financial goals
The next step should be to create financial goals for your family. This could be to clear an outstanding debt or to save money for a once-in-a-lifetime family holiday. You may also want to save money to put towards your children’s university education or first home. Having financial goals will help your family prioritise saving and make smarter spending decisions. It will also motivate you to stick with your household budget and avoid making unnecessary purchases.
Grow your savings
Growing your savings will give you more financial freedom and help you achieve your financial goals. It will also mean that you have money set aside to cover you in emergencies i.e. if one of you loses your job or becomes ill. Having sufficient savings is an essential part of maintaining healthy finances. According to advice on moneyfarm.com, you should aim to save at least three months’ worth of living expenses. Your budget will help you determine how much you can afford to put into savings each month. For instance, if your monthly incomings are £3,000 and your outgoings are £2,200, then you should try to put £800 into a savings account each month. You can also boost your family’s savings by finding ways to reduce your spending. Taking advantage of vouchers such as AliExpress coupons can be a great way to get discounts on purchases and maximise your savings each month, for example.
Use a budgeting tool
There are plenty of budgeting tools and apps that can help you manage your household finances. You can also use a budgeting tool to identify unnecessary spending and increase your family’s savings. Luckily, many of these tools are free to download and use. Some of the most popular budgeting apps include Money Dashboard, Bean and Yolt.