Creating a Household Budget
Sound Family Money Management
While going through this process of creating a household budget, it is beneficial to get a slightly different perspective or idea about how to achieve financial freedom. With this article, you will gain a better understanding of good sound family money management as you are creating your own personal spending plan.
Going through these personal budget planning exercises will give you the information you need to help you decide on your cutbacks. It also will include a savings element to ensure you are constantly putting something aside every week or month.
Pay Yourself First
There's another well-known saying, "Pay yourself first". This might sound contradictory to an earlier statement where you were advised to pay your bills off quickly to save on interest charges. While this still holds true, you want to be building your savings at the same time.
The best way to do that is to make sure you incorporate a portion of your income to savings. It doesn't have to be a lot but over time it will be significant. Not only will saving every month build your financial security, it also will build a resource you can draw from in emergencies, rather than seeking credit.
When creating a household budget, start by listing all your bills and what they are every month. Make sure you allow enough to cover those monthly payments. If you have an ongoing payment for a larger amount, like a credit card charge that you are paying off a bit at a time, allow more than the minimum amount due as this barely covers the interest that you are being charged every month. If you can, pay this one off as quickly as possible as the interest rate his outrageously high.
Did you know that a $500 credit card bill will cost you $115 over one year at 23% interest rate? It's only about $10 a month, but you can see how it will add up. Think how that $10 a month will boost your savings.
Add into your budget a specific amount that you will put into your savings every payday. Maybe you can only find $10 or $25, but consider that this is just temporary until you get your budget rolling and discover ways to save money. When that happens, you can put even more money into your savings.
Account for it All
Your budget should cover everything that goes out as well as everything that comes in. From this point, you can see exactly where you are spending the most. If, at the end of the month, you see that you should have a few hundred dollars left over, try to figure out where that money went.
That is money that you are wasting that could be going into your savings. It's money that you could be using to achieve your most desired goals, rather than squandering it on little things like buying lunches instead of packing it or getting a new pair of earrings that you don't really need every month.
This is why it's important to have strong goals, things that mean the world to you. It will give you the motivation to stick to your budget and take every opportunity to put more money into that goal-getting fund.
Once you have completed these exercises for creating a household budget, it's time to move on to finding ways you can put more money in your pocket and less in everyone else's.
The Stage Is Set – Let's Start Saving
This is the part you've probably been waiting for. There is a whole section on this website full of ways you can do to cut costs every day that can add up to significant savings over
time. You can also get weekly tips in your email Inbox by filling out the form below. Remember, it's not about depriving yourself; it's about reaching your goals. If you have sound family money management as you are creating a household budget, and maintaining it, you have learned how to achieve financial freedom!
Oh, yes, sorry. Here are some of those easiest ways to save money using great frugal living tips.
The next article in this making a budget series explains why when you first prepare your household budget plan, it is common to find expenses totaling more than your income.
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