When money is tight, running a family home can be tough task, and it's all too easy to overspend and get deeper into debt. Creating a budget doesn't have to take hours, and once done, it can help you to take control of your finances.
Why do I need a family budget?
The ultimate goal of a family budget is to save you money. By knowing exactly where your hard-earned cash goes each month, you'll be better able to see where you can cut back, and how much, if anything, you can save for a rainy day or expensive times of the year like birthdays, holidays and Christmas.
With a completed budget, you'll also save time when an unexpected bill or expense pops up, because you won't have to calculate what you can and can't afford afresh each time. And last but by no means least, it will help to ease your mind. Just knowing how much you are spending and what is left goes a long way to putting you in control of your money, and sometimes that's half the battle.
What to do
Honesty is the key to making your budget. You need to list everything you spend money on - and that includes your morning paper or afternoon chocolate bar as well as the weekly food shop. Go through recent bank statements so that you know exactly what and when your monthly bills leave your account, and if you're unused to keeping track of your spending, try writing a diary for a month, detailing every penny that gets spent.
Don't forget to add pricey things like Christmas into your budget, as you'll need to include these as spending if you're to avoid the usual New Year debt hangover.
Once you've properly tracked your monthly income versus spend, if you find you're overspending or would like to save more money, whether that be for a deposit on a house, an education fund for the kids or the holiday of a lifetime, it's time to cut back. And with your budget in hand, you'll be well placed to see exactly where the necessary savings can be made.
For instance, long-forgotten direct debits for subscriptions or unused gym memberships can be cancelled, and simple laziness when it comes to insurances may mean you're paying more than you need to, so it's worth getting comparison quotes for everything from utility suppliers to car insurance. You may even be surprised how those day-to-day little luxuries - a coffee on the way to work or a lunchtime sandwich - can quickly add up.
Look at the big payments too, such as your monthly mortgage repayment. Remortgaging could save you a bundle so it's worth a visit to a broker, or a chat with your existing lender.
If you still find you're overspending each month, think about separate bank accounts for bills, emergencies and daily living. Simply set up a standing order to transfer the earnings you need for bills and payments into a different account, and if necessary, do the same for food, for those 'big ticket' items like Christmas and holidays, and leave the remainder in your usual account. That way, you know everything is covered, and what is left over is what you can spend.
While a family budget can really help you to control your spending and make savings, if you are struggling to keep your head above water because of debt, don't delay - talk to a free advice service such as Citizen's Advice or the National Debtline to discuss your options.
Have you successfully curbed your spending by way of a budget? Leave your comments below...