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6 easy steps to surviving on less money

Write a family budgetGiven we have started a new financial year it might be on your minds to see how you can make your family’s income stretch a little further this time around.

Before becoming parents it seemed that we could more or less do what we liked with our money and there would always be some left in the kitty. Whatever expenses or bills that came in and absorbed our funds were not usually greater than the salaries we had coming in.

Nowadays with me only working part-time that is not the case at all.

I sometimes feel like I am failing to contribute when I don’t bring in a significant paycheck but I have come to realise that my contribution is in controlling the outgoings and expenses. And this is definitely an important one! I may not be able to control the utilities or mortgage repayments but I can control some expenses such as groceries and kiddie-related ones. I can also keep our finance stresses to a minimum by managing our paychecks and expenses smoothly throughout the year.

The best way to see what is coming in and what is going out of your bank account is to do a budget. I know that for some this is either a fearful, overwhelming or eye-watering subject but it truly is the best way to track and prepare your finances.

And it is not something that only financial planners or those who like maths can do – you too can have budgeting success!

There are many apps or gadgets out there to help you set one up. I prefer the first principles approach in Excel myself but in each and every case you need to tailor your budget to you and your family.

How to write your family budget

  1. Sit down and list your income sources.
  2. And then sit down and list all your expenses. I like to organise these like a waterfall where money goes to those expenses that are a ‘must get paid’ first like the mortgage, health insurance etc. Then other payments are made like utilities, mobiles, sponsor child etc. And then are the expenses that you have some level of control over like groceries, entertainment and the (gasp!) credit card.
  3. Once you have all your incomes and expenses listed give yourself a pat on the back and a well-earned indulgent afternoon tea.
  4. The next step, which I think is crucial, is to work out the frequency of the expenses. For example the council rates and insurances are annual so note this down. Check with your hubby on how often he is thinking of getting the car serviced this year, that type of thing. I find the best way to handle these bulky expenses is to smooth them out and save for them with each pay. We save a little bit each fortnight into a separate account for these types of expenses. If we don’t do this we end up struggling as large bills like these can eat up a whole payslip and then cause major problems for the rest of my ‘must get paid’ items- does this resonate with anyone?!
  5. To make this step of smoothing our expenses easier my husband and I find that drawing up an annual chore checklist is a good idea. Not only does this help us get on top of lots of things around the house which don’t get done regularly, it also helps identify the bulky expenses that we often forget about. I am talking about just a simple piece of paper where you list monthly, quarterly, half yearly and yearly jobs. For example having the house pest sprayed might be an annual job and expense. Obviously not all these chores will have a cost attached but still it we find it a valuable tool to have on our pin board and use in our budgeting.
  6. Once you have a draft budget up and running then you can test it out and refine it. See how things go and if your estimates were accurate or not.

Image credit: phloxii/123RF Stock Photo

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