Knowing where your money is going is essential becoming financially stable. Creating a family budget can be difficult when so many expenses seem to pop up out of nowhere, but it is possible. Here are five tips to help you establish a realistic budget that whole family can stick to.
1. Keep Track
The first step to creating a family budget is to find out exactly where your money is going. It can be shocking to see how much money is being spent on small, unnecessary items. A good bit of advice is to spend an entire pay period playing money detective. Keep every receipt and write down every single dime you spend during this period.
2. Cut Extra Spending
After gathering hard evidence of where your money is going, it’s time to get honest with yourself. Is there anything you are spending money on that could be cut out? Do not let this exercise induce guilt if you enjoy small luxuries. Money is only valuable if you can use it to purchase the things you truly do need and want. However, look at those things that aren’t as important and find ways to cut back. Instead of purchasing every new best-seller, use your library card. If you love movies, consider an in-home movie night rather than going out. Focus on simple things you can do that add more money to your budget without reducing your overall quality of life.
3. Save It
With any extra money you’ve found within your budget, start saving for annual items that can creep up on you like Christmas, a birthday or that pesky auto registration fee you have to pay every year. Keep this extra money in envelopes marked accordingly instead of leaving it in you bank account. This removes the temptation to spend it on something else.
4. Track Payment Due Dates
Keep on eye on payment due dates and set a reminder on your computer or phone for all revolving account due dates. Any credit account that’s close to its limit is at risk for a cascading event of fees that will push you over your limit. If you find yourself facing a situation where you cannot pay a bill before you are assessed a late fee, consider a cash advance, like cash advance San Antonio TX, to make the payment. This is preferable to being charged a late fee on an account, but be sure you can pay back the loan when it comes time.
5. Get Cheap
Finally, challenge yourself to find every item you need for the lowest possible price. Consider buying used items instead of new. Instead of hosting an elegant dinner party, invite your friends over for a potluck. For every expenditure you need to make, brainstorm about ways to do it for less and watch the pennies you save add up!
This article was written by Dixie Somers on behalf of Power Finance.