Life is unexpected, things happen but being prepared for the worse doesn’t have to eat away at your expenses
When raising a family no matter how large or small, finances become tighter and budgeting becomes a necessity in your life. When money is tight, it is hard to think about forking out extra cash for insurance, but if a catastrophe occurs, you will be glad you made the investment.
The most important aspect of budgeting is sticking to it and this can be a challenge at first especially since family budgeting requires cooperation. The first step is to develop a budget; sit down and determine your essential monthly expenses. These might vary a little for each household, but the essentials include things like rent/mortgage, utilities, food, and gas. Government mandated insurance like car insurance, should go on this list as well including any debt payments.
Use your bank statement as a reference, so you don’t forget any important monthly bills and evaluate your list. You might find that some of the essentials are not essential, like paying for cable and streaming networks that you might decide to cancel cable and repurpose some of that money. Consider this list and discuss whether you really need everything on it.
Now that you know what your main expenses are, you can start considering items that are just below necessities. Insurances usually fall into this category and it is important to look into health insurance, home insurance, and life insurance. Meet with a local insurance agency to discover what plans are right for you and your family. It might seem like a luxury, but if a major accident should occur, you might find yourself inundated with bills you are ill-equipped to pay.
Account for every dollar earned and once you have your necessities and your not-quite-necessities covered, you can budget for savings, vacations, date nights, etc. Set aside a specific amount for eating out and fun experiences. It is vital to stick with these budgets from month to month. You can always adjust as you find out what works and what doesn’t.
Each month, sit down and evaluate your spending. What areas worked well? Where did you slip up? Forgive yourself when you make mistakes but learn from those mistakes. Looking at where your money is going each month makes you cognizant of what is superfluous. Consider the value for the money spent. Was the expenditure worth it? If not, make an effort to change your spending habits.
Creating a budget and sticking to it is a great way to get out of debt and stay out of it. It is easy to accrue debt, as many people go to college using loans. As you build a family, it is easy to justify lowering your payments when in most situations you are better off paying as much toward your debt as possible. Once you free up that income, you can then you can make the decision to splurge on life’s extras.
Budgeting can be overwhelming at first, but once you get the hang of it, it can be life-changing. You will become much more aware of where your money is going and this helps you make better decisions about your spending. It can actually take the pressure off paying all your bills and you know what to expect each month having planned ahead.