You are definitely not alone if you find it a struggle to keep on top of your finances and many families have to be very savvy with every dollar they spend if they are to avoid going into the red.
Here are some sensible financial tips that could make all the difference when you are trying to make ends meet and balance the budget.
Keep a close on every dollar you spend
It might sound like very basic advice but it is surprising to discover how many people can’t account for a fair portion of their spending.
This is because they don’t track their expenditure and make a note of what they are spending their money each week. That coffee to go on the way to work or a snack on your way back home can soon add up to a sizeable sum of money that you have spent over the course of the month.
You probably know how much you are paying in rent and what it costs for your gas, electric, and cable, but the only true way you can keep on top of your money and spending habits is to see exactly where your cash is going.
Keep all of your receipts, however small the amount you have spent is, and then put these figures on a spreadsheet or list them on a sheet of paper.
Some people may have had to end up using the services of this bankruptcy attorney as a result of getting in a mess with their money. You can help avoid that scenario if you keep a very close eye on every single dollar that you earn and spend and devise a budget.
Divide your cash up each week or month
Whether you get paid weekly or monthly it is important to be able to budget what you have to spend after you have paid all the essential bills.
The best way to gain control of your spending is to list all your expenditure in various different categories, such as priority outgoings like your mortgage or rent, and utilities, groceries, and entertainment etc.
Work out what percentage of your budget need to allocate to each category, bearing in mind that it is not much you can do to adjust how much it costs in rent or mortgage payments each month.
It is a useful exercise to put all your spending into different categories as it highlights whether you are overspending on non-essential items like eating out or going to the movies.
If you work out that you have 20% of your income spare for entertainment and leisure, for instance, this will give you a realistic budget figure for this spending that you need to stick to.
You can’t do it alone
Families are all about doing things together and if you are trying to put your finances in better shape it means that everyone in the house needs to pull together in the same direction.
If your kids are slightly older, it’s a great idea to get them involved in your financial planning and make them aware of the need to budget.
They might not like it when you say not to a fast food treat but at least they will understand the importance of financial planning if you explain to them where your money goes and why you need to budget.
It could also provide a useful life lesson that they will use themselves when it’s their turn to pay the household bills.
Prepare for emergencies and the future
Budgets and financial planning are not just about the here and now, good money management also means looking ahead and thinking about your future needs.
One of the most common things that throw a family’s finances off track is when an unexpected bill has to be paid, such as a repair to the car or maybe the boiler.
If you don’t have the spare cash to pay the bill or have to stall paying something else to find the money, that can have knock-on consequences with your budget planning. It might be tempting to resort to borrowing the money you need, but short-term loans, in particular, are very expensive.
A good strategy would be to have a savings account where you put a regular sum of money into. It doesn’t have to be a lot each month, but at least you will have access to some emergency funds if you need them in a hurry, and you won’t be paying hefty loan fees.
Don’t forget to put the cash back as soon as you can. Also, try to put some money away for big-ticket items like a car or a holiday, so that your regular finances aren’t put under such a strain in the future.
Be strict with your credit card spending
Charging an item to your credit card doesn’t really feel like you are spending real money and it is all too easy to get carried away and run up a big bill.
Credit cards are useful if they are used in the right way. It is essential that any amount you spend is paid off when the statement comes in, otherwise, you will end up paying interest charges that can soon escalate.
Avoid using your credit card for purchases that you know you won’t be able to settle in full when the bill comes in.
Try using cash
A good strategy to use when you are on a tight budget is to swap your cards for cash when you go shopping.
It is highly likely that you will end up spending less in the shops when you are handing over cash rather than charging the amount to your card.
Adopting the mindset that all you have to spend is what you have in cash is a great way to learn how to be more disciplined with your finances.
Draw out the amount of cash you have available to spend each week and see what a difference that makes to how you spend
It could prove to be the wake-up call for your spending habits that is needed.