Setting yourself up for financial success for your entire life can seem like it’s impossible. However, it is as simple as creating an attainable budget for you and your family, so you stay organized. Budgeting is one of the easiest ways to ensure that you have savings for emergencies that come up. You need to make sure you don’t overspend on unnecessary purchases. With whatever method you use, crafting a family budget can get the entire family involved with learning about the importance of financial wellness. This ensures that you and your partner are in agreement with the plan. It also involves your kids in regards to learning about the importance of money management.
The following tips will help you create the perfect budget:
Know Your Monthly Income
Start by analyzing your family’s financial needs and wants through looking into the basic steps you can take. A simple way to start involves these two things: knowing your income and your awareness of expenses. Your income primarily comes from the money that you make from your job.
Do you have a side hustle or other sources of income along with your main job? Make sure to include them in your budget. You’ve got to know the total amount of money your family has to work with each month. After you have determined your total monthly income, the next step is to add up your monthly expenses.
Calculate Your Monthly Spending
Another important part of crafting a successful budget is through knowing what you spend your money on and where you’re spending it. As a general rule, when looking at your spending habits, you should think about the 50/30/20 rule. This rule states that 50 percent of your income should be spent on housing and other needed items to maintain life. 30 percent of your income can be spent on entertainment or used as “fun money.” The remaining 20 percent should be placed into a savings account. When looking at your expenses, it’s best to group them into these categories, so that you can create a good spending strategy later on.
Cut Expenses if Needed
There could be instances where you realize that you and your family are spending far more than necessary in a certain category of your budget. Therefore, it’s vital to determine where you can cut back. If you find that your family spends too much money on non-essential items, it’s time to take a closer look at the ways you can cut costs.
The number of streaming services is one of the main expenses that families overspend on and fail to realize. I’m definitely guilty of that! Companies make it very simple for families to sign up. They’re convenient and inexpensive…until you’ve subscribed to multiple streaming services! But after using them for months, the cost of streaming services can add up. It’s then you may realize that you’re not getting your money’s worth. If this is the case, pick one or two of your favorite services to keep, and cancel the rest to save some additional money.
Save, Save, Save
Now that you’ve completed the process of cutting your expenses down, the next step includes the last category from your budget, which is the 20% that you should be saving each month. Saving money is crucial to having good financial health. If the year of 2020 has taught us something, it’s that anything can happen in the blink of an eye. For some, this includes being without a consistent or reliable source of income for a little while.
Creating a savings account is important, to ensure that if you do have to forgo an income, you can at least have a safety net to fall back on. Using an online platform for managing money or another digital-based financial service on your smartphone is one of the easiest and convenient ways to create a savings account. With these resources, you’re able to have access to your safety net from anywhere you have your smartphone, and it can help limit the anxieties of not being prepared if an emergency does arise or if you need a quick way to check your current financial status on the go.
Creating a family budget is one of the easiest ways to ensure both that your current and future financial health are taken into consideration. Having good financial wellness can help you ensure that you and your family are aware of your financial behavior and can better prepare for those emergency moments and costs to come.