Written by: Cally Worden
For me, budgeting has to be one of the dullest activities on the planet. But in the spirit of debt avoidance is it is also one of the most important. Sigh. Fortunately, there are a few tricks of the budgeting trade that can help make the activity a little less tiresome. Here are some budgeting tips for parents to help you avoid slipping into a pall of money-management gloom.
Start as you Mean to Go On
Do it once, and do it right. Establishing a framework for your budget is a one-off chunk of effort that thereafter should only require minor tweaks. So, instead of half-heartedly scribbling a few figures on the nearest scrap paper that will inevitably end up with pictures of fairies drawn on it by your little girl, sit yourself down at the PC or fire-up your tablet and create an electronic version. Save it, and then save it again somewhere else as a back-up. You really don’t want to have to do this twice if you can avoid it.
What your Budget Looks Like
Ideally, you need to be looking to generate an overview of your family income and expenses over a period of time. A one-month snapshot is useful, but there are always blips that can throw careful financial planning off track in a heartbeat, so it’s useful to catch some of these in your overview.
By month, over a three month period, list all known fixed outgoings separately from the variable ones. It’s the ones that change that you have most control over, and it is within these figures that you have the flexibility to make savings if you need to, or find extra cash for those blips.
Once you know how much you are spending and on what you can develop a basic monthly budget that reflects the reality of your current spending patterns.
Next, it’s time to weed out the essentials from the desirables. The non-critical expenses will be the ones to go in the event of a cashflow crisis. This can lead to some tricky conversations. To me, my morning coffee is an essential, without which I cease to function. Yet if the chips were down I could (and would) live without it. But not before my husband and I have done battle over whether it’s MORE essential than his early evening beer…
More serious issues in this vein include the prioritising expenditure on clothes for work and school, and whether extra-curricular activities can be accommodated for the kids.
Chatting through issues like this can help you prepare for budget tweaking when it’s necessary, and avoid conflict when other pressures are mounting. It’s always easier to reach agreement on sticky issues when the atmosphere is relaxed and calm.
Create A Spending Plan
Following your spending pattern assessment and your reality, check you are in a strong position to create a family budget that is both workable, and best meets the needs of the whole family. If there is some slack in your budget, it’s also time to talk about long-term savings goals, including retirement planning, holiday savings, or money for big home improvement projects. If these things are important to you but can’t be covered by your current income, you may want to think about how to improve you income – overtime, second jobs, moving back into work if you have been responsible for childcare, and so on.
There are a few simple and obvious, but oh-so-easy to ignore shopping tips that can help any budget. Try to make an effort to tune into your internal financial planner whenever you are considering any type of expenditure, and ask yourself – how can I save money here?:
- Plan a weekly food menu and avoid adding surplus items to your shopping basket
- Use comparison websites to make sure you are securing the best deal
- Sign-up to a cashback website for online purchases
- Choose less expensive brands on some basic food items
- Avoid great sales deals on items you don’t really need
- Make use of coupons and online vouchers
- Buy secondhand, and use sites like Freecycle to source items when having new isn’t absolutely essential
- Pass clothes down from one child the next, and accept handouts from others when offered
Don’t Let it Lie
If your situation changes, and in any event every few months, you should revisit your budget and make sure a) you are sticking to it, and b) that it still works for you. Make changes when you need to. Cut costs on non-essential and desirable items when you have to. This process should be simple once you have a robust budget framework in place. You don’t need to reinvent the wheel every time you check your budget. Many things won’t have changed, but the key to success is updating it to reflect those things that have. It gives you a sense of control, and helps to keep a check on any wayward spending that may be leading you towards debt.