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Taming Your Household Budget
Running a household these days is no easy feat. Swim meets, packing lunches and school bake sales on top of your regular 9-5 day job can be overwhelming to say the least. With such busy lifestyles, it can be very easy to overlook some of the most fundamental and important areas needed to run our households smoothly. For many, finances can be confusing and so having a good understanding of the fundamentals of household budgets will help tackling this task much easier.
Many financial experts advise that saving for an emergency should come as a priority. With belts being pulled so tight, putting money aside for imagined scenarios may seem like a wasted task. However, therein lies the danger. No one schedules an emergency and so keeping a separate account where savings can be tucked away can be very helpful. Setting up an automatic transfer of a small percentage of your pay can add up quickly and because it is being kept aside from your regular savings account, what is out sf site will also be out of mind. A comfortable goal would be to aim to have six months’ salary set aside in case of job loss, illness or major disaster.
Fixed expenses include housing, whether payments be rent or mortgage payments. Since they will be regular, monthly payments of approximately the same amount, using an automatic payment is again a useful tool. This way, you can subtract the amount while tracking the numbers but the actual act of the payment is taken care of for you.
Some families make it to the market once a week, while others prefer several smaller trips. Whatever your method, consistency is the key. Meal planning can help you stay on track because after a long day, it's easy to double up on cost and call for a pizza if we don't have a plan. If you need a break, budget in a treat once a month for a family dinner out.
Although some utilities are unavoidable, others may be unnecessary. A good way to track these costs is to avoid the temptation to place them on the same budgetary line as a total cost. Keeping each utility separate can not only show the exact numbers, it can help you decide if you are getting the most bang for your buck on unnecessary services such as cable, cell phone and memberships. If it doesn't serve you, don't be afraid to cut it out.
This bucket includes credit cards, loans and vehicle expenses. This type of debt is of major concern because it is not static. The amount of money on a credit card can vary, as can the interest rate and as such, can get out of control rather quickly. Paying down your consumer debt as quickly as you can will not only save you on future interest, but will also keep your credit rating in good standing.
This category is not to be confused with your emergency savings. The money put away for your future is an addition to the savings put away for what may happen now. Again. an auto-transfer may be a helpful way to save for your retirement with the least amount of effort. Some employers offer retirement savings plans where they match your contributions so contact your company's finance department to see if you may be missing out on any unadvertised programs.
Taking the time to sit down, write out a plan including a list of expenses with real numbers attached will only be of benefit over time. In the end, don't work for your money- make your money work for you!