If you are under financial strain, then it can be tempting to just stick your head in the sand. Unfortunately, that won’t make everything go away, trust me, I’ve tried it! The sand pit left my hair in bits! Here is why budgeting for the family will save you stress (and money!) and how to go about it all:
Why bother with budgeting for the family?
Here are a few good reasons:
- A family budget allows you to control your household spending so that you have enough money to pay your bills and manage your disposable income.
- Spreading the cost of your outgoings throughout the year means you can not only plan for the inevitable bills. But also fun stuff, like holidays and of course the future!
- It will stop you being stressed about money. Believe me on this. Feeling on top of your money situation really helps to relieve a lot of the stress even if you know it’s going to take you a while to work on saving.
- Budgeting for family expenditure really does help you not to overspend and, more importantly, it lets you see exactly what you are spending your money on. By knowing where you spend money, and then being careful, you can even start saving money too.
So how do you go about working out a family budget?
I use an Excel spreadsheet for our family budget and each month I check in on our expenditure and make sure we’re keeping on track.
- First work out how much money is coming in to the house each month, only include regular payments, that way anything extra is a bonus! Sift through your pay slips for the last few months and put the income into one column. This will help you to work out what your average household income is.
- Now work out your monthly outgoings. Include things like rent/mortgage, electricity, home heating, phone packages, car repayments, loan payments, child care, health insurance, weekly grocery etc. Every home has different outgoings, so you’ll know best what to put in this column! Don’t forget to include yearly bills like TV license, car tax & insurance etc. Just divide them by 12 to get the monthly cost. Put these outgoings into another column.
- Now that all the necessary stuff is taken care of, try to work out your average weekly/monthly clothing costs, extra-curricular activities etc. You know, those things that we like but could probably cut back on if absolutely necessary ;)
- Now add up the income column if you have more than one income line to get total income.
- Now add the outgoings column items together. Great!
- Then add the real fun stuff column items together!
- When that’s done, add the outgoing and fun stuff column together and subtract the total from the income column. If you’re still in positive numbers, you’re doing well. However, if you’ve just discovered that the total is -€256.87 (like I did the first time I sat down with pen and paper! ), then it’s time to start cutting back on the fun stuff for a while.
Only you can decide where you need to cut back. If you do find you need to cut back, then look at areas where you can cut down on expenses. It doesn’t all have to come from the fun stuff column, maybe switching your phone, tv or energy provider could make you some savings!
Now that you crunched the numbers…
- Once you’re finished crunching the numbers, work out your new monthly budget and try to stick to it (that’s the important bit, sticking to it!). If at all possible, try to set a little extra aside in savings each month for those inconveniences that always seem to crop up just as you think you’ve got it sussed!
- It might be a good idea to get the kids involved too, I know some parents don’t like to let their kids know if they’re in any kind of financial spot, but I find telling mine a little bit of what’s happening doesn’t do any harm. Letting them know that if we go to the cinema to watch that “must see” flick this weekend, it’ll be coming out of the music lessons fund. This helps them to prioritise too and to understand the importance of knowing where money comes from and how it gets spent.
- Now that you know how much you have and haven’t got, it’s a good idea to keep on top of it, review your budget plan every few weeks, if it isn’t working for you, make some changes to make it work for you!
Don’t be afraid to ask for help if you need it
If you’re finding it hard to manage or every time you think you’re making ends meet somebody moves the ends, then maybe it’s time for some independent advice. There are services such as Money Advice and Budgeting Service (MABS) or Citizens Advice that give free, impartial advice on money management, so if you are struggling, do contact them, it won’t do any harm and chances are it may help.
Over to you now. Do you have any tips for budgeting for the family? Share them with us in the comments below.