Between cooking, cleaning, shopping, and playtime, managing a family can be a full-time job. There often isn’t much energy or time to spare, so things like planning a detailed budget can easily fall to the wayside. But budgeting is the best way to ensure your family is always taken care of to the best of your ability. It also gives you a way to plan for the future and build savings without constant stress. To start improving your family budget, here are a few tips to keep in mind.
Prioritize the Necessary Expenses
The first rule of budgeting for a family is to always prioritize what requires the most attention. Expenses such as bills and debt payments should never be put last. This is especially true when it comes to rent or mortgage payments. Some of the most pressing family expenses include:
Your budget will be impacted by your family’s size, so you have to find a way to work within the unit rather than around it. For a household of four to six people, groceries alone can cost over $1,200 a month. In the worst-case scenario, it is possible you may find yourself unable to pay for certain things. If that’s the case, you’ll need to find ways to reduce your monthly obligations going forward.
Refraining from eating out too much, buying packaged coffee instead of drinks at a café and cancelling any unused subscriptions are ways you can cut the costs. Another way you can help make your budget more affordable is to refinance your student loans into a new one through a private lender. The new loan you receive can be used to finance your expenses easier and gives you a nest egg to plan for the next month. And since private lenders are most likely to give you lower interest rates, paying back the debt is a lot less stressful.
Follow the 50/30/20 Method
There are plenty of ways you can budget, but the most common and effective one is the 50/30/20 method. This is how you can easily divide your monthly income into the appropriate categories. The method goes like this: 50 percent of your budget goes to the necessities we listed above. 30 percent can go towards things you can safely splurge on while the remaining 20 percent goes into savings. This is a simple strategy for even the most unorganized person. Sticking to this habit may even inspire you to learn more about an organized lifestyle in general.
Have Emergency Funds at the Ready
It should go without saying that every family needs to have an emergency fund in the event you are unable to pay for your expenses. You don’t know what can happen in the future. In the event you can’t afford groceries, you lose your job, or even your medical coverage, you need to have something to fall back on in a time of crisis. While the amount you should have in emergency savings does depend on your lifestyle and the size of your family, you should aim for at least $3,000 at all times. Ideally, an emergency account will have three to five months of rent/mortgage put away.