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Planning family budget

How to Manage your Family’s Finances

Managing your family’s finances is crucial. Not only does it help you pay for your monthly expenses and make sure your creditors get the money they expect, but having a family budget can also help you plan for the future. Whether you want to save for a home, a new car, a family vacation, your children’s education, your retirement, or anything else, you’ll need a family budget to get that done.

Here are some tips for managing your family’s finances that will help you make ends meet and achieve your goals.

Create a Budget that Works for You

Everyone’s budget is unique. The budget you have for your family will be different than any other. When you set out to create your budget, take this into consideration. Sit down and calculate your monthly expenses. What does your family spend money on? You’ll need to make all of these expenses fit into your budget so that you’re spending less than you make.

You will likely need to set some priorities at this point. For instance, if you don’t have enough space in your budget to spend $50 on streaming services and $50 on ordering pizza each month, think about which one is more important to you and dedicate your money there. Or cut costs elsewhere to afford what matters most to you.

Remember that you should put some money aside each month for emergencies. Life is unpredictable, so you’ll need to be prepared for unexpected situations and costs. Be sure to include a category in your budget for emergency savings.

Cut Costs

Most people can cut some money from their monthly budget. Track your spending for a while and see where your dollars are going each month. The result might surprise you.

Once you know where your money is going, look for places to cut. Common cuts include eating out less, spending less on entertainment, making lunch or coffee at home instead of buying it, driving less to save on gas, etc. Look at what you’re spending money and see which cuts make sense for you.

Don’t Pay Fees You Can Avoid

If you’re paying fees on your bank account or credit card, talk to the financial provider and see if there is anything you can do to reduce or eliminate them. Spending $10-20 a month on service fees may not seem like a big deal, but these costs add up.

Having a budget will also help you avoid overdraft charges on your bank account.

You should also make a point to write down when all your bills are due and create a plan to pay them on time. This will help you avoid paying late fees and penalties and additional interest.

Pay Off Your Debts

Don’t forget to include debt repayment costs in your budget. If you have credit card debt or other debt, come up with a strategy for paying these bills as quickly as possible and include these costs in your budget. As mentioned, paying bills on time will save you from being hit with penalties, and paying down debt as quickly as you can will help you spend less money on interest.

Communicate

When you have a family budget, all members of the family need to be on the same page and communicate with one another. When you’re creating the budget, make sure you have input from everyone in the household old enough to do so. This can help determine priorities and make sure that no one feels left out of the process.

While each member of the family will obviously make small purchases without discussing them with the rest of the family first, make sure everyone understands the budget and that they know not to go overboard.

Set a dollar limit for what constitutes a larger purchase.  With these larger costs, make sure to confirm with other family members before spending the money.

Do not hide spending from each other. Even if one person makes a mistake and overspends, it’s better to tell the rest of the family immediately rather than try to hide it. This way, you can budget for it properly and not be caught by an unexpected bill.

Set Financial Goals

Each family will have its own financial goals. Determine what these are for you family and create a plan that helps you reach them. Figure out how much you’ll need to put aside each month to afford things that matter to you, like vacations, new cars, etc. and then treat this like a bill that you need to pay each month.

Review Your Budget Regularly

A budget isn’t a static thing that you create once and then never touch again. Priorities change and circumstances do as well. Make sure to take the time to sit down as a family and review your budget regularly. It’s important that your budget reflects your current reality. Things change and your budget should as well.