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Saturday, 28 May 2016

The Family Budget - Making It Work

Working out a budget and sticking to it can be one of the biggest challenges within a family. Multiple expenses arise such as Dad spotting a new gadget to adorn his man cave, the kids needing new shoes or upcoming school excursions, or Mum opens up a pile of bills that the mailman so kindly delivered.
Even though making a family budget may seem tricky, it can be done. I certainly won’t sit here and say to you that I have always stuck to our budget. Of course there has been times that I’ve spotted that awesome dragon figurine, or a new Elmo and completely blown my budget for that week..it happens!! But I have found that when I do stick to it regularly, it has greatly improved my family’s financial outlook. It’s resisting the temptation to spend that I need to fully conquer :)  

Here's a few pointers that were given to me when I first set about making a budget. Hopefully they will be a help to you.
Record. If you have multiple incomes, record everyone’s individual income and combine it as the household income. Perhaps a source of income fluctuates from month to month, if this is the case, use the lowest amount or average it out.

Keep track of everything you spend, for a month or so. Keep all of your receipts, and if you have older family members that spend alone, ask them to turn theirs in to you each day

Add up all of your monthly expenses. Make sure to include bills, debt payments, groceries, and everyday expenses such as lunch money, smokes, transportation costs, pet needs.

Cut Back Bills. Discuss how you can cut down on the electricity and/or gas bills, groceries and other necessary family expenses. Perhaps carpooling or taking public transportation could be a way of cutting back vehicle running/maintenance costs, buying more generic foods and putting extra blankets on the bed.

Trim luxury expenses Getting input from other family members will help you determine which expenses are necessary and which ones could be cut down or eliminated. Maybe you and other family members could start taking lunch to work instead of eating out, or maybe the kids can drop an after school activity.

Estimate how much you can save on regular expenses, and cut the completely unnecessary items out of the budget. Then redo your budget and see where you stand.

Bonus! If you end up with extra, allocate a portion of it to savings and treat yourselves to something you may have had your eye on. If you're in the red, go back and rework the budget until you have more income than expenses.
Teaching kids at a young age how to budget can be a great benefit to them later in life. It helps them get into the routine of managing their finances and can possibly help ease money issues in their adult life. One great way to help them get started is through FamZoo.com
FamZoo’s Virtual Family Bank can help teach your kids good money habits. This is a great idea for kids, teens and even parents. You can set up accounts for each family member, create incentives and develop good money habits. They are currently offering a month’s free trial, there’s no better time to start. Check it out here!   - Or perhaps after you finish reading my post :)


Being Realistic
One reason that family budgets often fail is because they're just not realistic. It's great to cut down on expenses, but sometimes we can go too far. For example, cutting entertainment out of the budget completely might look good on paper, but we all need a little enjoyment every now and then. Consider finding ways to lower the cost

Individual expenses can also be tricky. Try allocating a certain amount for each family member to spend each week. If someone spends their entire amount before the week is up, reevaluate his expenses and adjust if necessary. Creating a family budget can help keep spending under control, leaving more money to pay down debts and save for future goals. But in order to succeed, close monitoring is essential. Your efforts will be rewarded, however, with less financial stress and more money in the long run.

Unfortunately, debts happen! Even for those who manage debt well, unexpected life changes can result in difficulty making ends meet.Debt has a way of creeping up on us if we let it. It's important to keep our debt at reasonable and manageable levels, or we could end up incurring insane interest charges and scraping to make our payments.

When we find ourselves having problems with debt, the first course of action is to take a look at the budget. Finding ways to cut back on unnecessary expenses can help us pay down debts and keep monthly bills current. Sometimes we need outside help. It's hard to go to someone else when you're having money troubles, but if you don't gain control over your debts, your credit rating will suffer.

It’s important to take charge before it's too late.

Some debtors turn to debt consolidation as an answer to debt problems. They transfer high-interest debts to a lower interest credit card, or they put up the equity in their homes to get the money to pay them off. While these options can provide lower payments, they are not without drawbacks. Closing numerous accounts and putting all of your debt into one account can negatively affect your ratio of debt to available credit, lowering your credit score. Using your home equity to secure the money needed to pay off debt can put your home at an unnecessary risk.

One popular option is credit counselling. Credit counselling agencies offer help with budgeting, and in some cases, they will set you up with a debt management plan. A debt management plan involves negotiation with creditors to obtain lower interest rates and lower payments. The debtor makes one monthly payment to the credit counseling agency, and the agent forwards payments to each creditor.
Although a debt management plan can help you get out of debt faster, but it can also impact your credit. A note is added to your credit report stating that you are undergoing credit counselling. This means that you can't get new credit. However, this notation is removed once you've paid off your debts.

An overabundance of debt can wreak havoc on our finances and our credit scores. It can also be the cause of undue stress and tension within your family. By seeking help at the first sign of trouble, we can often prevent our debts from spiraling out of control.

Hopefully this has helped you in some way. Remember how I mentioned FamZoo.com? Now would be a perfect time to go and have a looky. I highly recommend it Check it out for yourself.
*Disclaimer - YES! They are affiliate links. Thanks for checking them out :)
Perhaps you know a family with kids? Give them a FamZoo gift subscription and help the parents teach their kids good money habits or share this post with them.

I'd love to hear what works for you or what have you found doesn't work?

Til next time,
Stay Safe, Stay Smiling :)