How to create a monthly family budget
Managing family finances can be tricky and you might not always feel in control. It’s incredibly easy to overspend, especially with children. However, it’s important to prioritise your financial commitments where possible, ensuring you always have enough money to do the things you and your family love.
In this article, we’ll be discussing how to create a realistic family budget to stay focused on your goals and reduce financial anxieties.
Work out your total income
Firstly, you need to understand how much money you have to work with. Knowing your total household income, including any additional tax credits or benefits, can help you be more aware of exactly how much you have coming in.
Your employer should automatically deduct any student loan payments and workplace pension contributions before you receive your monthly wage.
If you’re self-employed, you will have to pay tax to HMRC after filing a Self-Assessment each year, so don’t forget to subtract this sum from your total income to work out your post-tax earnings.
Identify expenses
By reviewing your fixed expenses, you can identify how much money you know will be leaving your account each month. These refer to bills that usually stay the same, such as rent/mortgage, household bills, and car finance.
Variable expenses are costs that may change over time, such as groceries, personal care, and shopping. Once you’ve listed your monthly expenses, you can work out where you can afford to make cuts.
Be sure to shop around and find the best deals to save where possible. If you have a few family members who drive, consider switching to multi-car insurance. Review your phone contracts and see if you can get any better deals. Even the small changes can make all the difference.
Pay off debts
Paying off any outstanding debts should be one of your top priorities. By doing so, you’ll have more money in the long run to spend on well-deserved family time.
Try to pay off the debts that incur the highest interest first. You should aim to do this as soon as possible to reduce any interest you accrue over time.
Alternatively, you could try the snowball method, paying off your smallest debt first and working your way up to those larger debts. That way, you’ll feel a sense of accomplishment getting rid of each debt one by one.
Pay attention
Trying to keep track of your spending habits can be daunting, but paying attention to what’s coming in and leaving your account is crucial to taking control of your finances.
Don’t forget to regularly check your accounts to ensure you’re not being charged for any unnecessary subscriptions you don’t need. This can also help you oversee any overspending, allowing you to cut down where necessary.
Set goals
Having financial goals in place can help you make smart money decisions. Setting these goals can give you something to work towards, whether that’s paying off debt, saving for a holiday, or buying your first home.
Goals are there to help you feel more ambitious and encourage you to stick to your budget.