Does your family currently use a budget? If a family emergency were to occur, would you be prepared for the unexpected expense? Do you like the way your savings account looks right now? If you answered “no” to any of the prior questions you have come to the right place. A family budget might seem complex, but it’s easier than you think! By making a few small changes in your daily spending you can start to maximize your savings! Free yourself of worry, start making healthy financial choices, and start saving!
Create a Budget
The first step to getting started when creating a budget is to start with your current monthly expenses and your current earrings. It’s important to gather all monthly bills, credit card statements, and pay stubs. Additionally, try keeping a small record of your daily expenses that may go unnoticed within the big picture. Try keeping a notebook on you to write down every-time you buy coffee or grab lunch with a friend.
Think these “small” expenses are not important to worry about? Think about it this way… at Starbucks a Grande Chai Tea Latte is $4.45 if you were to buy this each day on your way to work the month’s total would be $97.90. The small numbers are just as important!
Once you have gathered all this important information it is time to start creating a spreadsheet. This spreadsheet will break down your monthly income and expenses. This is the foundation of your budget! Now, you will be able to see where your money is going. As a family you can make choices to cut certain expenses from your budget. For example a streaming service that you pay for monthly, but no longer use.
At this point there should be a leftover balance which is money that can be used for unexpected family emergencies, getting out of debt, or savings. However, if you find yourself in a situation where you are spending more than your monthly income, it is at this point you should look to making drastic cuts to your expenses.
Set Financial Goals
Financials goals are different for each family this also depends on what stage of life you are in with your family. There are different levels and types of goals you may want to set for your family. It could just be paying off your credit card debt or it is to have a college savings for your child. Either way you are going to need your foundational budget to make this decision.
Using your foundational budget you are going to look specifically at what your “leftover” is from each month. This is the money you have left after all your bills are paid and your income is accounted for. As a family you are going to make a decision as to where this money should go. Some may dump it into a general savings account and others may choose to put it towards a more specific savings account.
Financial goals should be realistic, achievable, and done in a timely manner. For example, if you would like to pay off a $1,000 credit card debt and have decided to put $100 a month toward this debt, your goal would be to pay off this credit card in 10 months. Try using a fun visual to track your progress each month!
Once you have achieved smaller goals, such as paying off debt, you can start to work towards bigger goals. This is where you can start to focus putting money towards college funds, a house, retirement, and even a vacation!
Plan for Family Emergencies
Emergency funds are crucial especially in the fragile job market we are experiencing in 2020 due to the current global pandemic. Most say an emergency fund should be able to secure you and your families current lifestyle for 3 months. Do not panic if that is not you, this post is to help you get started so you can achieve that. Emergency funds can be used for a variety of things, however most commonly fixing a car, a hospital stay, your mortgage or rent, and any other unforeseen emergencies.
Starting a family emergency fund is as simple as setting a financial goal. What can you use from your “leftover” that can be put into a savings account that will only be touched in the event of an emergency. As we did with our financial goals above, start by setting a goal amount. Next, figure out how much you can allot to that monthly goal and set a time period to achieve that goal. Try putting $100 a month away towards this goal. Once you achieve your set goal you can jump down to $50 a month. Because family emergencies are unexpected, its important to put even the smallest about away each month – you will be so grateful for that saving of money no matter the amount.
Automate Your Savings
Almost all banks transfer between checking and savings accounts which can be automated. Once you have completed your family budget and have decided the amount you would like to allot towards your savings, login in to your bank and set that up. This will ensure you never miss transfer your saving and your saving will start to grow on its own!
Try to set annual savings goals, that you review regularly. Once you’ve hit your annual goal you can make changes based how comfortable you feel. Add more or less it’s up to you!
Start a Side Hustle
Another way to boost your savings is to pick up a second job or a side hustle. This can be a fun and fairly easy way to earn extra money and boost your savings! The idea of a budget is cut expenses, but the limit to earn… is well, limitless! There are so many ways to earn extra money. Try by starting with your current employer, ask if there is an extra shift or few extra hours available. You can also look into a part-time job on evenings or weekends.
Additionally, there are plenty of companies that allow you to work part-time at home for example: a call center. Or, picking up a gig that allows you to create your won hours such as driving for Uber, Lyft or Postmates. You can even look into teaching English with VIPKid or create your own lessons to teach on Outschool.
There are a lot of options when it comes to creating an additional income. It may take a little bit of extra work, but watching your savings grow will be worth it!
Find a Community / Create a Support System
Look no further than your current favorite social media app and I can guarantee that there is a debt free community waiting for you! On Instagram alone “#debtfreecommunity” has over 1 million posts! That’s a lot of people who are the same journey you are on. Savings and budgeting does not need to be a solo activity. Do not ever feel you are not alone in this journey to financial freedom.
Reach out to family and friends. Let them know your new financial goals and why you may be looking for “free” activities to do on the weekend. It may inspire them to start saving too! It’s important to find or create a community that shares the same goals and values as you. You can hold each other accountable and share little victories together. They may even have some savings and budgeting tips and tricks to share with you!
The first and most important step is just get started! With a little hard work and dedication you can grow your savings and create a debt free life for yourself and your family. Create small, attainable goals, plan for the unexpected, find a community to support you, and start saving!
Research for this article was sourced from the following: