Putting your family on a budget doesn’t mean you have to restrict and/or sacrifice. Instead, it means that you make smart financial decisions for everyone, ensuring that you set yourselves up not only for the present but the future too.
If you don’t have a budget set up for your family, don’t worry – it’s never too late to start.
Get to Know Your Financial Situation
How aware are you of your financial situation? Do you know where your money goes each month? Do you have money set aside for saving regularly? Are you sure that you can cover your bills each month? If you don’t know these answers, it’s time to get intimate with your finances.
Pull out your bank statements and bills for the last few months. Look at each line closely and determine where you spend your money. Categorize your expenses and highlight the categories that you know you overspend. This will be an area of focus later on.
Figure Out Your Debt
It’s okay if you’re in debt, but you need to get out of it. Paying off your debt should become a line item in your budget. We like the 50/20/30 budget where 50% of your income covers your regular bills and expenses, 20% covers your debt repayment and savings, and 30% covers your ‘extra’ expenses, such as entertainment.
Using the 20% number, you can figure out how much you can afford to pay toward your debt each month. If you like methods, choose a debt payoff method, such as the debt snowball or debt avalanche method. But, don’t forget to save a portion of that amount. You need to invest in yourself as well – you never know when you’ll need to tap into your emergency fund.
Create Financial Goals
When’s the last time you set financial goals? Whether you want to pay for your child’s college education, pay for a luxurious vacation, or buy a new house, you need to write down your goals and make them a regular part of your budget.
Remember that 20% portion of your income? Direct a small sliver of it to fund your goals, even if it’s just a little bit at a time, your money earns interest and your interest earns interest.
Here is a great article I wanted to share form Mama Bear Finance. It’s about setting financial goals for 2020.