collaborative post // Planning family budgets today is more important than ever, with the average costs for two-children households rising by £400 a month. Higher prices require good spending strategies – whether you’re struggling to make ends meet or have started to feel the inflation’s bite.
Consider the below tips and strategies to help you better plan your family’s budget.
Why is family budgeting important?
Planning your budget to improve your family life gives you better control over your money and comes with a list of benefits, including:
- Helping you to focus on your financial goals, such as buying a house or a car.
- Ensuring you have an emergency fund for unexpected costs.
- Giving you an insight into where money issues might be arising from.
- Making discussing money with family members easier.
- Allowing you to decide on what you can borrow.
- Keeping you on top of your spendings, especially on essentials, like bills, rent and food.
- Provides you with a clear picture of your savings and debt.
Strategies to help plan your family budget
1. Start by assessing your finances
Take a close look at your bank statements and determine how much income you have on a monthly basis, including your salaries, pension, interest or any other sources.
Also, estimate your expenses to keep track of what you spend per month – and don’t forget the cash. Money can seem to disappear
suddenly, so staying on top of outgoings can give you an idea of how much you need for essentials and where you can cut down and save, such as unused subscriptions.
2. Travel and car budgeting
Your daily commutes and travels can add up, with a combination of fuel, MOT’s and other repairs on the vehicle. There is also the lump sum spent on a new family vehicle. Therefore, when looking for a family car, you could consider a cheap car loan to spread the cost from 12 months up to five years.
This will help to avoid large payments that may disrupt your budget for the month, helping you to spread the cost over smaller monthly repayments. However, you should always ensure you can afford to pay the full total plus interest before taking out a loan.
3. 50/30/20 Budget
Thinking about saving? The 50/30/20 budget method is a good place to start. This means putting 50% of your income towards essential bills, 30% into fun spending, and 20% into a savings account or to pay off debt.
Saving provides better financial security and provides a buffer in case you need more money.
4. Clearing debt
Clearing debts should be prioritised as it’s very important for reaching financial freedom. If you have debts to repay, use the 20 of your income that was initially for savings.
Clear high interest debts, or ‘problem debts,’ first to avoid paying the increasing interest. You might want to tackle the smallest amount first if this will motivate you and give you a quicker sense of achievement.