It’s a delicate balancing act but you don’t need me to tell you that I’m sure. How do you allow for all the costs during the year, make sure that the bills are paid, that there are enough savings for special occasions, and not end up pulling your hair out in frustration?
I’d love to tell you that it’s easy to manage the family budget, but it’s not. Setting up a management system will take time. I’m not going to pull any wool over your eyes. My best advice to you is to put the time in today, and you’ll find it much easier in the future.
This is not an exhaustive list. I’ll bet you have some tips that are far better than mine. If you do please let me know!
- Get organised. Pull together all of your bank account statements for the past year, household bills, school bills, and spending records. It’ll probably take you some time so take a break once you have a big satisfying (intimidating) pile on your desk.
- Use your own resources. Compile a spreadsheet of all your spending. Online banking will normally allow you to download a “.csv” file to analyse and this is very helpful too. If you’ve never ever done a spending spreadsheet the first will take ages. The good news is that once set up it’s sorted for the next time and easy to maintain.
- Categorise spending. Bunch your costs under sections such as “utilities” for electricity and heat, “housing” for rent/mortgage, “groceries” for (you’ve guessed it) groceries. Some categories won’t change through the year, others are bunched expenses that happen at the same time each year. Like for example back to school expenses, car tax, or Christmas.
- Don’t forget to add in your income! You can’t work out a family budget unless you know how much you have to spend.
- Spread costs. If your earnings are monthly then divide your costs across 12 months of the year so that you know how much you need to put away to save for the bunched expenses. If you get paid weekly, then divide your costs by 52 weeks, 26 weeks for fortnightly payments.
- Consider moving to monthly payment plans for utility bills. Most utility providers offer a monthly payment plan so that you pay the same amount every month of the year and don’t get hit with a surprise big bill in the middle of Winter. I do this for the electricity and gas. It makes it so much easier to plan for monthly costs.
- Allow for disasters. Ideally you’d have enough savings to cover at least 1 full month of your costs in case of an emergency – that’s housing, household, groceries, and more. That might seem pie in the sky right now but consider taking your full month of costs and dividing the cost by 52 weeks so that you can start accruing for it over the year ahead.
- Be realistic. If you have a car then you can’t go a full year without replacing the tyres at least once, and at least 1 full service. It’s an expense that people sometimes forget when planning for the year ahead. If you will need an NCT this year include the cost of that as well. It might be a small cost but you literally need to include everything!
- Don’t be disheartened. It will take time to figure out this family budget, and you can do it and manage your budget well so that you don’t get into rolling debt.