Supporting a family can be expensive, and many families experience financial struggles at some point. Organising your finances can often be necessary for managing all the costs. If your family finances are currently a bit of a mess, below are a few tips that could help you to get things back under control.
Eliminate unhealthy debt
Borrowing money is necessary for many things from starting businesses to buying a home. However, there can be times when borrowing money isn’t necessary – and often unhealthy. Some of the worst types of debts include gambling debt, payday loans and high credit card bills accumulated from buying personal luxuries. These types of debts can quickly grow and become hard to keep on top of – start making an effort to only borrow money for positive things that you need, while paying off any existing unnecessary debts. The debt snowball method is one of the best ways to pay off multiple debts – it involves focusing on paying off the smallest debts and then moving onto the larger ones. A consolidation loan could also help to organise your debts, allowing you to pay off multiple debts and focus on one single monthly debt payment.
Create a monthly/weekly budget
A lot of unnecessary debt such as payday loans and arrears are accumulated as a result of poor budgeting. Creating a budget simply involves setting a limit on how much you spend so that you don’t go overboard on unnecessary purchases like takeaway meals. It’s worth keeping a monthly and a weekly budget. There are many budgeting apps that can help you to track your spending, preventing you from overspending.
Start setting aside emergency savings
There will occasionally be unexpected costs that throw your budget off course such as surprise car repairs or vet bills. Many families pay for these by borrowing money, however you may be able to greatly reduce how much money you need to borrow by setting aside some savings. Experts recommend having funds worth at least three months essential outgoings in a savings account. This means that if you spend roughly £5000 in three months, you should try to have £5000 in savings. Start contributing money into account until you’ve reached this figure and then top it up every time you dip into it.
Make a priority list
Every month, it’s worth making a list of all the things you want to spend money on. This could include family days out, birthday gifts, clothes and new appliances. Work out which of these expenses is most important and which is least important. This could help you to budget your disposable income more effectively. If an emergency cost arises, it could also help you to decide which purchases to make now and which to delay.
Plan expenses ahead to save money
Planning many purchases long in advance can help you to save money – or at least make things more affordable. For example, don’t wait the week before a kid’s birthday to buy gifts. By getting hints a few months before, you can look out for sales and save money on items. As for things like holidays, there may be interest-free instalment schemes that you can pay – the further ahead you book, the more instalments you can pay in, which means smaller instalments each month.