Not only governments do it! – Preparing your family budget
We are quite familiar with the yearly budget speech by the finance minister. It is an annual exercise where the government allocates spending from available income. Assume you are your own household’s finance minister. Would you consider preparing your own family’s personal budget?
In previous articles, we discussed the benefits of budgeting for students, Young Adults, and the annual Christmas Budget. In this section we shall try to help you prepare your annual family budget – no easy task. But hey, if the minister can do it, so should you!
Preparing a budget may be the best way to get in control of your finances and know exactly where you stand financially. It helps you map what income you receive and what expenses are being incurred. It therefore enables you to direct your money to where it is needed most, so you can stay on top of bills and start putting money towards your future goals such as for education, a holiday or your retirement!
If you need to get started, we have a budget calculator which if followed step by step will assist you in planning your finances month by month. Depending on the result you may need to take steps to review your position. For example if it is clear that your monthly expenses are leaving you with no savings, you must start with removing any non-essential items. Any savings from these can go to achieve your goals and perhaps even your retirement.
Look out for any annual one-off expenses such as your home, health, life and motor insurance – you may wish to spread their premium between different months in order not to be burdened with a lot of expenses with one pay cheque. You can also plan and save an amount each month towards these expenses in order to avoid any bulk payments if changing premium dates is not possible.
In order to curtail your spending with regards to utilities such as water, electricity, internet and television try to check if there are any offers or government subsidies from which you may benefit. For example it might be worth to invest a capital sum to install alternative energy or change appliances if these lead up to monthly savings. You may also consider your telecommunications package to check if there is anything which you no longer need.
If you have a surplus (thumbs-up!) after taking into consideration any future savings, your next step is prioritizing. Check if you need to setup an emergency fund which may cater for any unexpected damages to any of your assets such as vehicles or appliances. Also remember to consider home maintenance and any other one-off similar expenses. With any surplus you may start saving for a short family holiday or even to replace your vehicle, for example.
In order to organize your money for different expenses you may consider opening separate bank accounts which nowadays can be easily managed through internet banking. For example you can setup an account named ‘bills’ wherein you put a monthly amount which would go towards such payment and another called’ family holiday’ wherein you will save for a long awaited break! Always make sure not to use any funds placed in such account – ideally these would not be connected to your card or cheque book to avoid any temptations!
Finally, the most important thing about a budget is to stick to it at all costs!! Essentially it is all about being disciplined with your finances. Money does not grow on trees and saving is a lot harder today than what it used to be. It won’t be easy but who said being a finance minister is easy?Last updated: Sep 07, 2016