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Setting Up a Family Budget for Better Savings

Monday, November 9th, 2015 by Mike

If you have just been married and getting settled in to your new life, then it will help you immensely to get started right. So many couples have found out the hard way that starting off on the wrong foot financially is not worth it in the long run. Creating a family budget from the start is a great way to control the money flow and save money. Here are some basic tips on how to create the budget you need.

Put in Monthly Expenses

Making a household budget requires that you start with the essential expenses. This includes payments that you make monthly, such as your utilities, car payment, rent or house payment, etc. Then add in the quarterly or semi-annual payments, but divide them by the number of months in between and enter that number in for each month.

Eliminate Unnecessary Expenses

The next step is to add in all expenses that you have every month. If you have not previously kept any kind of record, you will need to do so for about a month, to determine exactly where all the money is going. Most likely, after you look at this list and add it all up by category or expense, such as lattés, videos, eating out, etc, you will be surprised how much is going to waste.

Finding more money to be able to put into savings will most likely come from these items. If you want to save money in a bigger way – and faster – then you will need to cut down on these superfluous expenses. This can include many money saving ideas such as get a simpler cable TV plan, getting videos from your public library, eat at home more often, look for low cost fun activities, etc. Think about the future and it will make it a little easier to part with some of these extras.

Designate an Amount for Savings

If you are serious about saving money and putting more in the bank each month, then it will be necessary to designate a specific amount to go into some form of savings account. Ideally, you want the money to be directly deposited into your savings account if possible. This way you will not be tempted to spend it on something else.

You may also want to subdivide this money up into various accounts. These can include some long range goals (such as buying a house, new car, retirement, etc.), and some short range goals (such as electronics, a new suit, a vacation, Christmas, etc.)

Add in Inflation and Extras

Personal finances can be managed more accurately if you build a little leeway into your family budget. You do not want to account for every penny because unforeseen expenses will occur sooner or later. You need to add into it an inflation rate of about 5 to 8% per year. If one year does not see this much inflation then put the difference into your savings accounts and start earning interest on it.

Also, add in a little bit for some fun things. When the children come along, you will want to have some extra money to do some things together with them – or just go out together for a date. Better money management using a family budget leads to greater savings.

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4 Responses to Setting Up a Family Budget for Better Savings

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  2. Joel Gray says:

    Coming up with a family budget is a good way to be prepared for some unexpected expenses. It begins with an attitude to not overspend. You also have to allot a time frame for the budget. This is a great tip to get you a better lifestyle.

  3. heaps! says:

    About budgeting, tracking your expenses is not emphasized (not in your blog, but I mean in general). I’m glad that you mentioned that you should track expenses for a month because not only will it help show where your money is going, but it will also make it easier to set up a realistic budget for the next month.

    And when setting up a budget, making it realistic is very important, otherwise people will get discouraged and will fail to set up one for the coming months. And penny pinching is never worth it, because it will make saving so hard.

    And when you mentioned the amount for savings, having a goal is important so you see that there is actually a reason for saving. You wouldn’t want to be saving blindly! You need some incentive.

    Good post, Cheers!

  4. gerber says:

    I like how you suggest to “designate a specific amount” to save every month. Most people stick with an easier approach of saving whatever is left at the end of the month and of course they end up putting aside a much smaller amount from what they would love to. Setting the goal number and sticking to it will provide a more efficient way to save.

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