Making a new family budget can feel a bit overwhelming, but it’s one of the best ways to secure your financial future. No matter if you already have an existing budget, or creating one for the first time, a budget is the most important step in taking charge of your finances. If you don’t know how much you’re earning, spending, and where it’s going, then how can you maximize your savings and debt repayments? The simple answer is you can’t. So if you’re ready for the task of making a new family budget, here are my top 4 tips to creating a family budget that will help you get on track.
1. Track Your Spending for a Month or More
Take at least a full month to track your spending and I mean every single cent. One of the most important budgeting ideas is knowing exactly where you generally spend your money so you can see where you can make some savings or what are fixed expenses that cannot be changed. I suggest doing at least a full month of tracking so that you can see a whole picture of everything. I think it’s worthwhile organizing everything into three categories: the first being fixed expenses that cannot be changed such as insurance, school costs, etc. The second is things you’re spending on that are necessities that could be made smaller, such as groceries, light bills etc. The third category should be the extras that you can maybe cut down or get rid of such as eating out, weekend spending etc. This will help you clearly see where your money is going and what things you can cut down your spending on.
2. Create a Spreadsheet
I personally like to use Google documents in my Gmail account to manage my family budget spreadsheets. That way you can easily share it with your partner if appropriate and you know it will always be saved and accessible. Start by putting in your fixed expenses, because those are the most important things. I would organize them by categories that feel relevant for you and your family. Then add in the variable expenses, followed by the luxury expenses. Using the numbers you found in the first step, you can start to form ideal spending amounts for each category of spending.
3. Be Realistic About Debt Repayments
If you have any debts, figuring out how to quickly pay them off is an important part of managing your finances and family budget. As a general rule, you should always try to pay off more than the minimum amount to ensure that you’re paying it off as fast as possible. When repaying debt I like to use the ‘snowball method’ which basically means focusing on smaller debts first so that you can use that monthly repayment amount to pay off other debts. Factoring in debt repayment is a really important part of making a family budget and of course this will vary depending on how much money you have left over each month and how much debt you have.
4. Focus on Savings
Do you have a clear monthly savings goal? Savings are important for having free money to invest, for having an emergency fund should any unforeseen expenses come up and to allow you to do those big purchases. You may realize that you need to make some changes to your budget in order to reach your saving goal. If there’s a big gap between your ideal saving amount and what you find you’re actually able to save each month, then you may want to slowly cut down your luxury spending so that you can put more into savings. If there’s still a large gap, it may mean that you need to consider looking into a side hustle to save more. There are so many side hustles you can do from the comfort of your own home from working as an assistant online, to even creating a blog! At the end of the day if you’ve skimmed down your spending as much as possible and still aren’t reaching your goals, this might be the only way to achieve them.
Creating a new family budget is an exciting opportunity to reign in your spending, see some big changes with your debt repayment and can be a great way to amp up your savings each month. I hope these tips inspire you to achieve your goals.
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