Budgeting and managing money
Why money management is important
Basic money management involves managing your family’s daily expenses, paying unexpected bills, and saving for the future. This can help you feel less stressed and more secure.
Money management is a team effort. Communication within your family is key. Having honest conversations with your partner can help you avoid financial conflict if you have one. It can be easier to reach savings goals by including your children in budget planning and budgeting.
Why a family budget is a good idea
It is important to have a family budget to manage your money.
This is because a family budget can help you:
- Spend your money wisely on what you need – these are your requirements
- These are your needs.
- Save money for unforeseen expenses, such as a car breaking down or requiring repairs
- stop accidental overspending.
You can calculate how much money is needed for daily necessities like food, housing and utilities such as electricity, gas, water and phone. This will help you ensure enough to cover unexpected costs and emergencies.
Budgeting is a great way to help your family, and you take control of your finances. It can help you avoid getting into debt. It allows you to enjoy your family and not worry about finances.
Budgeting: How to get started
Budgeting is as simple as following a simple rule: Spend less.
List what you earn, spend and owe is one way to begin budgeting. You can look at your past bank statements, benefits statements, credit card statements, and salary statements. It would be best to look at any money you earn or spend in other ways.
To understand your spending and earning habits, look at enough statements and bills from the last year. It is interesting to see how different bills are priced at different times. Heating causes heating to make energy bills more expensive in winter.
After all your essentials and emergency expenses are accounted for, you want to have enough money to spend on the things you want.
The first step to managing your money is to figure out how much you spend.
The hardest part about managing your money and making a budget is keeping track of what you spend.
You can regularly spend (fixed expenses) or one-off, irregular (variable expenses).
You might consider including these fixed costs in your family budget.
- Rent or mortgage repayments
- Utilities – Gas, electricity, water and phone.
- Council fees and taxes on land
- Fees for school and tertiary education
- Insurance for your health, car, and home
- Public transport costs
- Repayments on credit cards and personal loans
You might consider including these variable costs in your family budget.
- Home maintenance and household goods
- School uniforms, books and stationery
- Medical and dental fees
- Petrol and car repairs
- Personal items such as haircuts and clothing
- Registration fees and equipment, such as for music, dance, or sports programs
- Gifts – such as for weddings or birthdays
- Other things, such as special treats for your family.
You might be able to find additional spending money if your income is sufficient.
Planning how and what you will save is a crucial part of managing your money
Your budget will show you how much you are spending compared to what you make. It can be helpful to have a family meeting and discuss ways you can save money. If you are already spending less than what you earn, it is possible to look at ways to save money and make the most of your savings.
These are some ways to save money.
- Take stock of your spending. Determine if you are making the most of your savings. Are you able to spend less on certain products? Are you currently carrying high-interest credit cards? These loans or credit cards could you be paying them off quickly so that you can look at other loan and credit options. This is a great idea.
- Create a savings buffer. It’s important to save extra money for financial emergencies before you start saving. You could, for example, aim to save some money in an emergency savings account.
- Determine what you are saving for. What amount do you need to save to reach your goals?
- Make a time frame for your goal. Saving money can seem like a long process. Be realistic, and you will avoid feeling under pressure.
- Open a fee-free account that is independent of your main account. This account can only be used to save towards your goal. To transfer a fixed amount of savings each month, you can set up direct debits from your main account.
- Consider other options. For example, your employer might split your salary payment so that some goes into your savings account.
- Talk to your bank, financial institution, or financial advisor.
Once you have a savings plan in place, it’s a good idea to go over the pros and cons of each before you begin. You’ll be able to see how the plan will affect your family’s life. You can seek advice and double-check your calculations if you are unsure about any part of your plan before proceeding.