John and Sarah had been married for five years and had just welcomed their first child. Despite having steady jobs, they felt overwhelmed by the added financial strain that came with having a baby. They created a household budget to help them stay on track with their finances to better provide for their growing family. With an organized budget, they could make sure their bills were paid on time and have enough money saved for a rainy day. Creating a household budget gave them the peace of mind of knowing that no matter what unexpected expenses came up, they could handle it financially.
I often ask clients if they have a budget. If they say no, I will ask them, “Do you think your employer has a budget”? My point is businesses operate on a budget. Don’t you think running your family finances like a business is a good idea? Household budgets can be a pain to stick to, but the savings are worth it in the end. Here are some tips and tricks to help you stay on track without feeling like you’re depriving yourself.
Here are the keys to creating a successful household budget:
- Know Where Your Money is Going
- Make a budget and stick to it
- Cut Back on Unnecessary Expenses
- Find Ways to Saving Money on the Budget Big 3
- Stay Disciplined with your Spending
- Review your Budget Regularly and Make Changes as Needed
Know where your money is going – Track all spending for one month to get an idea of where your money goes
Whether you’re trying to build savings for the future or make your way out of debt, knowing where your money is going is the key to success. It’s best to track all spending
for at least one month to get the most accurate picture. An overview of expenses such as groceries, rent, and monthly subscription services will help you decide which costs can be cut and which are necessary. Once you’ve got a clear idea of your financial habits, you’ll be able to start making smarter decisions with your money – or even reap some rewards from that new budget plan!
Make a budget and stick to it – Include paying yourself first (saving) in your budget so you can reach your financial goals
Have you ever felt overwhelmed by financial obligations? Do you want to make the most of your hard-earned money? When taking control of your finances, there’s no better place than a budget. It may feel unromantic or intimidating to set aside time and energy for managing our finances, but if there was ever an investment worth making, this is it! On top of that, don’t forget to make saving (paying yourself first) part of the budget. That way, no matter how small the amount may seem initially, you will be well on your way to growing your nest egg. Think of it as buying peace of mind, not to mention savings down the road! So don’t just dive right into paying off bills and never look back. Invest in yourself today!
Cut Back on Unnecessary Expenses – Do you need that daily coffee or to play golf every week?
Our society tells us often that it’s okay to borrow and buy things we don’t truly need, making it even harder to cut back on those extra expenses. In today’s world, it has become increasingly easier to splurge on things that might not be necessary. From our daily coffee run or pizza night with friends, it can quickly add up over time. While these expenses may seem small, over time, they can make a huge difference in our wallets if we’re not careful! The next time you feel the urge to splurge on something you want but don’t need, like playing golf every week, take a second and consider whether you could be putting that money to better use. You’ll thank yourself later!
Find ways to save money on the Budget Big 3 – Groceries, Transportation, and Entertainment.
Saving money on groceries, transportation, and entertainment (the Budget Big 3) can be challenging because these may be some of your most significant expenses. However, you can see some monthly savings with a little effort and planning. When it comes to groceries, try making a shopping list before you go to the store so that you only buy what you need. If you have access to a carpool or public transportation system, give ridesharing or public transit a try. It could save you quite a bit compared to driving alone. Finally, when it comes to entertainment and having fun, there are often ways to save on activities, like checking for discounts online and attending free events near you. Another example is checking out a book from your local library vs. buying it. With just a few tweaks, your wallet will thank you!
Stay Disciplined with Your Spending – it’s easy to overspend when you use credit cards or have cash in hand.
Sticking to your budget isn’t always easy. However, self-restraint is a must in today’s world of swipe-and-go. Credit cards can make overspending worry free – well, not so worry-free for your wallet! Especially if you have had a hard time battling temptation in the past. With that said, know when it is okay to give into small guilt-free pleasures here and there, but don’t let those tiny purchases slowly snowball into something much bigger than you expected. And even with cash on deck, consider limiting yourself to just what you need rather than letting yourself get caught up in the moment. Happy spending!
Review Your Budget Regularly and Make Changes as Needed – Life happens, and budgets should be flexible. Don’t forget to create at least a $1000 emergency fund and try to grow it to at least 3 months of expenses.
Making and sticking to a budget can be hard work, but it’s worth the effort. While life is unpredictable, having a flexible budget gives you power and control over your finances. After all, if you need to double-check the contents of their wallet five times before leaving the house, this is for you! Setting aside an emergency fund for that inevitable rainy day becomes even more critical in these uncertain times. Aim for at least $1000 to start rebuilding faster; then, once you’ve settled in, expand your safety net until it covers at least three months’ worth of expenses. This way, whatever life throws at you, you’ll be ready.
Summary
Now that you know where your money has been going, it’s time to take control and make a budget. But not just any budget, a solid budget that includes savings so you can reach your financial goals. And don’t forget to cut back on unnecessary expenses like that daily coffee habit or extra rounds of golf every week. You may even be surprised at how much money you can save by making small changes in your spending habits. Stay disciplined with your spending. It’s easy to overspend when you use credit cards or have cash in hand. Review your budget regularly and make changes as needed. Life happens, and budgets should be flexible. Let Stalwart Financial Planning help you create a personal budget that makes sense for you and your family.
Author
Isaac is a Fee-Only (no products sold) Certified Financial Planner® Practitioner. Isaac founded Stalwart Financial Planning with offices in Fayetteville NC and Durham NC. Isaac provides comprehensive planning and investment management services to individuals from all walks of life. Isaac can be reached by phone at 910-867-8464, or by email (iallen@StalwartPlanning.com). Visit him at Stawart Financial Planning www.StalwartPlanning.com.