When you were single and living alone, you might have had money to spare every week, or you may have lived with your parents and saved a ton. Now, however, you’re responsible for an entire family. This fact has caused you to need to reevaluate your budget. This is how you can do just that:
Choose a Budget Tool
Part of the problem with changing the budget or even creating one for the first time is that you may not know where to begin. Opening up a spreadsheet document or grabbing a piece of paper can still leave you feeling lost and confused. To help, you should look into an online budget tool. According to NerdWallet “Mint has been the gold standard for budgeting apps for some time, and the company takes the top spot here for a few reasons: The app automatically updates and categorizes transactions, creating a picture of spending in real time. Users can add their own categories, split ATM transactions into the purchases made with that cash, and set budgets that issue alerts when they start to top out. The service also comes with a free credit score.” This type of tool can help you to sort out your needs and to keep track of your spending.
If you’re having trouble setting aside money for investments Nerdwallet recommends “Acorns” — which NerdWallet reviewed in full here — “isn’t a budgeting app, but a savings tool. It helps users save more money by automatically harvesting the change each time they swipe a linked card. So, for instance, if a transaction adds up to $1.50, Acorns rounds it up to $2 and sends that 50 cents into an investment portfolio diversified with ETFs. It’s a mindless way to invest, with pretty reasonable fees: Users under 24 and students of any age qualify for free management; others pay $1 a month on account balances below $5,000 and 0.25% per year on balances of $5,000 or more.”
Factor in Everything
When you sit down to write out your expenses, you probably know that you need to account for mortgage or rent, heating, electricity, water, car bills, credit card payments and student loan debt. However, don’t forget to account for the smaller bills too. For example, you might need to contribute money to your children’s sports team, or you may have small private loan that you’re still paying off. Don’t forget that money has to pay for food whether you’re going to the grocery store or eating out at restaurants. Don’t forget to factor in things like insurance and saving for emergencies.
See What’s Left
After you have listed all of the bills that you absolutely have to pay, you need to decide what to do with what is left. While it might be tempting to put all of that money toward your family’s entertainment budget, that doesn’t leave you with much left for emergencies. Consider a bank that does automatic transfers to a savings account. That way, you can have money directly sent into that account when you get each paycheck. You can also choose a savings account that has a maximum number of number withdrawals it allows so that you aren’t tempted to take the money out.
Look to the Future
If you know that you have big expenses coming up in the future, start saving for them now. For example, you can conduct research on the average cost of college tuition if your kids are in high school or before). You can start saving for college with a 529 pre-paid college plan before your child is even born. If you know that you need to purchase a new vehicle soon, you can get a general idea of prices at a nationwide site like Kelly’s Blue Book, or you can check local inventories online, for instance if you lived in Brooklyn N.Y. you might go to Bay Ridge Nissan and look at local prices. Getting an idea of what future expenditures might cost allows you to set aside money now. In Avoid the Car Debt Trap we said, “The best solution to upgrading your wheels is to buy what you can afford to pay cash for. As long as your current car is running you should be saving for another one.”
Planning out a budget can seem tedious and overwhelming. In fact, you might find that the process is both of these qualities. At the end, however, you’ll have a well-developed plan that can help your family’s financial future.
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