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One of the most important things that you can do for your family is to create a sustainable budget. While it may not seem like the most exciting thing in the world to do, it may be the difference between living a comfortable lifestyle and scrambling to make ends meet. What are some of the aspects of a comprehensive and realistic family budget?
How Much Do You Make Each Month?
To determine what goes into your budget, it is important to know how much you make each month. Ideally, your housing costs will be no more than a third of your budget, and you want to try to save at least 10 percent of each paycheck. Food costs should not exceed what you absolutely need to feed your family healthy and balanced meals each week. Eating out or ordering meals should be part of your family’s entertainment or discretionary budget if you have money left over after bills and building your emergency fund.
Give Yourself Some Wiggle Room
In some cases, it may not be possible to spend less than a third of your income on housing. This is especially true if you live in cities like San Francisco or New York. Therefore, you will want to create some leeway in your budget to account for what things may actually cost where you live. However, you can stay as close as possible to recommended spending guidelines by getting a second job or getting a roommate to split your rent with.
How Do I Know What My Needs Are?
A need is something that you simply cannot survive without. It may also be something that you can’t reasonably live without like a comfortable pair of shoes or a car to transport yourself or the kids around town in. Your budget should make housing, food and clothing your top three priorities. Transportation and health care costs should also be included among the top items that you account for. After making contributions to a retirement or savings account, you can allocate funds for a trip to the movies or a family vacation during the summer months.
How Large Should My Emergency Fund Be?
Your emergency fund should be large enough to cover at least two to three months worth of expenses. However, you can grow it to cover up to eight months of expenses without hindering your ability to save for retirement or create an entertainment budget. An emergency fund is meant to cover expenses in the event of a job loss, accident or unexpected appliance repair.
What If You Want to Return to School or Leave the Workforce?
It’s natural to wonder what would happen if you quit your job or chose to go back to school. If you seriously feel like you need a new job or want to continue your education, make a plan to do so about six months to a year before you actually make the move. This will give you time to determine what you want to do and how going back to school may actually help you achieve that goal. It will also give you time to figure out how you will pay for the classes that you need or how you will pay bills until you find work in your chosen field.
Always Be on the Lookout for Ways to Reduce Expenses
There are many ways to reduce expenses in the event that you are having trouble making ends meet. If you are creating a budget for the first time, you may find that there are many items that you pay for each month that you don’t need or use. For instance, getting rid of that gym membership if you don’t actually go to the gym could save $100 or more per year.
Getting rid of your cable subscription if you don’t actually watch TV could also save hundreds of dollars per year. By getting rid of things that you don’t actually want or use, you can build an emergency fund or save for going back to school without actually lowering your family’s standard of living.
Whether you are a single parent or part of a nuclear family, it is critical that every dollar is accounted for. Otherwise, it may be difficult or impossible to keep a roof over your head, the lights on and the heat working during the winter. While budgeting may be boring and tedious at times, it will help you to live within your means and help you work to secure your financial future.
Jessica Kane is a professional blogger who writes for Faxage a leading company that provides Internet fax service for individuals and businesses.
